Full text of Diaries of Henry Morgenthau, Jr. : Volume 43 : Part 2

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- 27 the declaration.
I returned to Paris on the evening of October 17.
On the following morning I filed at 10 a.m. my cablegram
No. 1018, providing you with the English translation of

the Belgian declaration. In closing my message, I let
you know I had found all of the Belgian officials
pleased with the international progress which had been
accomplished through the three-power monetary and gold

agreements and desirous of Belgium's fitting into the
progressive arrangements. There was one suggestion
made by Governor Franck which I did not include in
my cablegram. That was that we should not endeavor

to add on to our tripartite arrangement more than the
three countries of Belgium, Switzerland and the
Netherlands. Governor Franck thought we should stop

with these three and then work through the B.I.S. in
our gold dealings with any other countries. Governor
Franck had emphasized to me that he had plenty of gold

and was entirely willing to lose some of it. He said
he had already been giving gold to France, following
devaluation of the French franc.
You telephoned me at my home at 1:20 p.m. on

Sunday, October 18. I summarized to you the account

of my Belgian trip as set forth in my cablegram No.
1018 above-mentioned. I told you of my plans for the
Swigs trip. You seemed to approve of the idea of a
general declaration such as I told you I had obtained
from Felgium, leaving technical details to be worked
out

- 28 out directly with the Federal Reserve Bank of New York

after the preliminary agreements had been reached. In
this conversation I mentioned to you a news item from
the Netherlands in regard to possible adherence of the

Netherlands to the tripartite agreement. I suggested
that I might possibly telephone Governor Trip of the
Bank of the Netherlands if we got Switzerland lined
up, to give him at least the opportunity of bringing
the Netherlands into the arrangement before we made

any announcement of these two countries. You told me

to hold this question in abeyance until after I had
returned from Switzerland and had telephoned you my

report. You said that you wanted to be careful in
having the State Department approve every one of my

individual trips. You asked if the Belgians appeared
to be in any great hurry for the completion of the
arrangement. I said I had told them I was going to
Switzerland and that I did not think they would mind
our postponing the announcement with respect to Belgium

until we might get both the Swiss and the Dutch into the
arrangement. You told me that the British would come in
with us entirely on these arrangements and were quite

willing for us "to write the ticket."
On the night of Sunday, October 18, I left Paris
for Switzarland. Upon my arrival next morning I went
to my hotel and immediately called upon Minister Wilson,

who lives in the hotel, to explain the purpose of my
visit. At 9:30 I was received at the Swiss National
Bank

- 29 Bank by President Bachmann. When I came in the door,
he asked me, "Where is Mr. Morgenthau?" I told him

that you were in Washington insofar as I knew. When
I had called Professor Bachmann by telephone at

Zurich to tell him that you wanted me to visit
Switzerland with the purpose of conferring with the
Minister of Finance, he simply misunderstood me to
say that you were coming. With President Bachmann
were MM. Schnyder and Weber, who are Vice President

and Third Member, respectively, of the Board of General
Managers of the Swiss National Bank, President Bachmann

being the first ranking member.
I proceeded with the Swiss along the same lines I

had followed with the Belgians. That is, I referred
to the exchange of telegrams between them and the
Federal Reserve Bank of New York; explained the

American position; and suggested the lines of a

declaration to set forth the Swiss devaluation, the
availability of resources that could be utilized as an
exchange equalization fund, the responsibility for the
management of such resources and the willingness of the

Swiss authorities to grant reciprocity to the United
States in gold dealings. Professor Bachmann raised

several technical points which he had set forth in his
cablegram of October 14 to the Federal Reserve Bank of

New York. He also wanted the inclusion in this statement

of a provision for immunity of gold holdings. I told
him that technical points would have to be cleared up
with the

- 30 with the Federal Reserve at a later period and that
it would be preferable to omit any request for
immunity. I reminded him that when an embargo had

been placed upon gold exports from the United States,

holdings of Central Banks had in fact been exempt. I
did not think it possible, however, for any pledge to
be given by us, in acknowledgment of the Swiss declar-

ation, which could officially bind us to guarantee
future immunity.
At 11 o'clock Professor Bachmann and I went to
the Swiss Ministry of Finance, where Dr. Meyer, who
is Chief of the Federal Department of Finances and
Customs and was on that date President of the Swiss

Federal Council, received us. We explained the idea

of gold reciprocity, and Dr. Meyer indicated his entire
approval of and sympathy with the plan for SwissAmerican cooperation. He explained that under Swiss

practice, it would be necessary, however, for him to
obtain from his colleagues on the Swiss Federal Council
approval of the proposed declaration before he could

sign it.
President Bachmann and I then returned to the

Bank, where a draft declaration was drawn up. My
Swiss friends were most thorough and pains-taking in

their efforts. The draft was typed out in French
and German, while I lunched with the three officers of
the Bank. The draft was revised after lunch and I
made an English translation thereof, which M. Schnyder
checked.

- 31 checked. The above tasks occupied our entire afternoon.
Just before dinner I called on Minister Wilson and

showed him the declaration. I left Bern that night
and reached Paris the next morning. My cablegram No.

1021, filed at 11 a.m. on October 20, reported my
negotiations and contained the English translation of

the Swiss declaration. In this message I explained
to you that I had cautioned the Swiss to guard the
negotiations as confidential, as I had the Belgians,
The Swiss, in turn, requested that the contents of
their declaration be kept confidential and be not
published. Furthermore, I let you know that several
days would have to elapse before the definite approval
of the Federal Council could be obtained.
At 4:30 p.m., October 20, I reached you by telephone
and summarized to you my cablegram No. 1021, reporting

my Swiss trip. You asked that I see the French the
next day and inform them of the results of my trips
to Brussels and Bern. You said that you would show my
cablegram to the British in Washington on the same day.

You said that you were considering the idea of limiting
operations by countries having no stabilization funds,
such as Belgium, to a quota, say 10 million dollars f
for any one day, lest some other countries might operate
through the country in question. You asked my idea on

this. My initial reaction was that such a restriction
should not be imposed, it being my feeling that we could
afford to be generous rather than otherwise in yielding
gold.

- 32 gold.

In my cablegram No. 1028, dated October 21, 6 p.m.,

I let you know that I had called on M. Baumgartner at
the Ministry of Finance, at 5 o'clock, and had

acquainted him with the results of my trips to Belgium
and Switzerland. I learned that the French were
entirely ready to move along with us in making
reciprocal arrangements with the Belgians and the
Swiss in regard to gold transactions. M. Baumgartner
asked that the French be given time to complete technical arrangements with such countries as the United
States might consummate arrangements with before we

issued any public announcements in regard thereto. The
French would desire to make simultaneous announcements.

M. Baumgartner hoped that the Netherlands would join in
the arrangement in order that a complete picture of

cooperation and solidarity between the six important
financial nations might be achieved.
On the morning of October 22, I received your
cablegram No. 421 of October 21, 5 p.m., raising a

question in regard to a spread in the Swiss buying and

selling prices of gold, as set forth in the Swiss declaration which I had cabled you. In my message No. 1034,
dated October 22, 2 p.m., I gave you my explanation on

this point. In this same telegram, I told you of a
letter, dated the 21st, which I had received from
President Bachmann, who said that the Swiss Federal

Council would pass on the question of the Swiss
declaration on October 23, and that the Board of General
Managers

- 33 Managers of the Swiss National Bank would then have

to submit the question for approval to their Board of
Delegates on October 27.

The Paris exchange market was quite hectic on

October 22 with the franc heavily under pressure, due
to domestic political concern over the Radical Socialist
convention at Biarritz and to International apprehensions
lest the Little Entente States follow Belgium's example
and declare their neutrality. In my message No. 1035
of 5 p.m., I gave you a summary of the day's operations,
including remarks of M. Cariguel thereon.
On the morning of October 23, I received your
cablegram No. 423 of October 22, 6 p.m., asking me to

inform the Belgian and Swiss authorities that, owing
to the extreme pressure of business and of the elections,
you would not be able to give the necessary consideration
to negotiations for gold arrangements before the following
week. I immediately addressed letters to MM. Franck and
Bachmann conveying this information. I telephoned M.
Baumgartner to let him know of your message, and also

to acquaint him with the delay that was taking place
in Switzerland, due to the necessity of procuring such

complete official approval of the declaration. M.
Baumgartner again asked if we had heard from the Dutch.

He said that it was possible that President Trip of the
Netherlands Bank might be visiting Paris the next week.

Incidentally, this visit never transpired.
You telephoned me at 4:15 p.m. on Monday, October
26.

- 34 -

26. You stated that you were satisfied with the
declaration which I had received from the Swiss on
my trip to Bern, and with the arrangement contemplated

therein. You were not satisfied, however, insofar as
Belgium was concerned. The declaration which I had

obtained from the Belgians did not let you feel that
you were doing business with the Treasury. You said
that the Treasury could designate the National Bank of

Belgium as its fiscal agent, or that the King of the
Belgians could reestablish the stabilization fund if
he desired. You would prefer to see the reestablishment of the stabilization fund, but you did not insist
thereon. You told me to visit Brussels again and see
that the arrangement was strictly between Governments.

If Belgium did not see fit to come in on our terms we
should go ahead with our arrangements with Switzerland.
When I mentioned that no word had yet been received

from the Netherlands, you said that you had no objection

to the French "building a fire under them" if they
desired. You told me to report promptly on my Brussels
trip when I returned to Paris.
In the afternoon of October 26 I talked by
telephone with M. Baumgartner. I mentioned our position
with respect to the Netherlands. M. Baumgartner said
he or M. Fournier would telephone Dr. Trip to the
effect that the Swiss and Belgians had approached us,

that I had visited their two countries, and that I was
going to Brussels again on Tuesday evening.
At

- 35 At 4:30 on October 27, M. Baumgartner telephoned
me that M. Fournier had telephoned the Netherlands
Ban's at Amsterdam but had learned that President Trip

was absent from the city. Undergovernor Fournier had

agreed to call President Trip when the latter might
be back in Amsterdam, and M. Baumgartner promised to

let me knew the results of the conversation when I
returned from Brussels.
In my cablegram No. 1053 of October 27, 5 p.m.,

I continued my observations of the preceding few days
upon the factors which were working against benefits of

devaluation of the French franc. In a later cablegram,
No. 1054, dated 6 p.m., I reported that, in compliance
with instructions received from you by telephone, I
was leaving for Brussels that night and should be back
in Paris on Wednesday night. In accordance with the

above plans, I left Paris on the evening of Tuesday,
October 27. When you had talked by telephone with me

on the afternoon of October 26, you had asked that I

go up to Brussels that same evening. I told you that
it was too late for me to telephone to Brussels for
appointments and to catch the train which left Paris
at 6:10 p.m. T. did proceed, however, to telephone
Governor Franck at once on Monday evening and made
an appointment for Wednesday morning.

No further instructions from you as to the specific
representations which I should make at Brussels arrived

for me before I left Paris or were transmitted to me
at Brussels before the hour of my appointment with the
National

- 36 -

National Bank of Belgium. I was, accordingly, free
to use my own judgment in endeavoring to obtain the

ends which I thought you desired. When I was received
by Governor Franck and Secretary Baudewyns of the

Belgian National Bank, I indicated to them your wishes.
Governor Franck again went over the Belgian situation

with me. I was definitely informed that the Belgians
had no intention of reestablishing a stabilization
fund. Realizing, therefore, that there was no likelihood of a change in the basic Belgian monetary set-up,

as pictured in the declaration which I had procured
at Brussels on October 17, I sought an additional
statement on the part of the Minister of Finance,
which might meet your requirements. My instinct
was to make no arrangement, even of a confidential
character, whereby the Belgian Government might be

placed in the position, before the Belgian public, of
seeking to contravene the laws and practices which fix
the relations between the Government and the Central

Bank. Governor Franck and I drew up a letter with
the above points in mind. We telephoned the draft
text to Minister of Finance de Man, who assented to
the terms, but requested that I learn from you whether
the draft would meet your requirements before he be
asked to sign the document.

I went to our Embassy in Brussels, where I

explained the situation fully to AmbassaGor Morris

and put in a call to talk with you at 2:30 p.m. I
then

- 37 then went back to the National Bank of Belgium, where

I attended a large monthly luncheon of the Directors
of the Bank, at which a number of prominent outside

officials were present.
After the luncheon I returned to the Embassy and

spoke with you. I read you the text, in English, of
the letter which had been drafted. You could not give
an immediate answer as to whether this would acceptably

solve the question. You asked me to cable the text,
together with my comments, Consequently, the draft

was not submitted to the Minister of Finance for
signature at a 4 o'clock appointment which had been

arranged for this purpose.
Before taking the 4 o'clock train from Brussels

to Paris, I again spoke with Governor Franck, and it
was understood that I should communicate further with

Brussels if you desired that the letter be completed.
It was agreeable to the Belgians that this letter be
addressed to you and be sent to me for transmission

to you. It will be recalled that I raised this point
with you on the telephone, since the Belgians were
uncertain as to whether the letter should be transmitted

in this fashion, or through our Embassy in Brussels, or
be simply a note addressed to me. I told Ambassador

Morris of all of my conversations, and he was entirely

agreeable to the idea of the letter being sent to you,
through me, if it might subsequently be signed. In our
conversation by telephone, you stressed the point that
any actual arrangements which you made with foreign

;ountries

- 38 -

countries in regard to reciprocal gold dealings would
have to be made public.

Upon my arrival in Paris on the evening of October
28, I name to the Embassy and despatched at 10 p.m.
my cablegram No. 1061, which I had prepared on the

train coming from Brussels. In this, I gave you the
text of the Belgian draft letter, and commented freely
thereon. I had done everything I thought possible at
Brussels to ensure that our reciprocal gold transactions
be of a governmental character. You will recall that
on my first visit to Brussels I had procured the
signature of the Minister of Finance to the declaration,
along with that of the Governor of the Central Bank,
and had also obtained the oral approval of the Prime

Minister of the country to the declaration. In drafting the proposed letter, on the second trip, I suggested
the reference therein to the fact that the National Bank
of Belgium acted as the fiscal agent of the Treasury.
In my cablegram I made the point, however, that since
gold which would be ceded to you from Belgium was

actually the property of the National Bank of Belgium,
the latter would not, in my opinion, be acting as
fiscal agent of the Treasury in such transactions. My
whole purpose had been to achieve an understanding as

completely in accord with your desires as possible,
but at the same time to make known to you attendant
facts and circumstances, and to take every precaution

to prevent any eventual criticism of our arrangement.

- 39 At 3:15 p.m. on October 29, I telephoned President
Bachmann at Zurich to learn what progress was being

made with the Swiss declaration. He told me that he
had mailed to me a letter, accompanied by copies of
a text of the Swiss declaration which had been approved
by the Board of Delegates of his Bank at a meeting held
on October 28, and was to be passed upon by the Swiss
Federal Council on October 30. He mentioned to me a
few changes which had been made in the text as

originally drafted when I visited Bern.
You telephoned me at 5 p.m. on October 29. I gave
you the substance of my conversation with President
Bachmann. We discussed the results of my Belgian trip.
You and Dr. Feis asked me for precise information as

to the position of the Belgians with respect to
publicity of any arrangements which they made with us.

You referred to the need of letting your public know
what you were doing, particularly since you faced the
necessity of having legislation passed to give

authority for the continuation of the Stabilization
Fund after January 31, 1937. You were fully aware of
the objections which Central Banks might bring up to
the plan which you had decided upon, with the President's
approval, for arranging gold reciprocity.
I mentioned to you that President Trip of the
Netherlands Bank had telephoned me on the preceding

afternoon from Amsterdam indicating the interest of

Premier Colijn and himself in inquiring in regard to
the formalities with respect to entering a reciprocal
gold

- 40 gold arrangement with the United States. You told

me that you preferred that I see President Trip in
Amsterdam, rather than reserve our interview for our
next meeting at Basel on November 9. You stated,

however, that your hands were full for the present,
and that you would give me specific instructions
later.
In my cablegram No. 1063 of October 30, 12 noon,

I confirmed my report of my conversation with President

Trip. I also let you know that at 10:45 on the morning
of October 30, M. Baumgartner had telephoned to inquire

about the present status of our negotiations. M.
Baumgartner strongly advanced the opinion that no
announcement should be made with respect to Switzerland

or Belgium until we might see whether the Netherlands

could also be brought into the agreement, and until
time was then given for France and England to agree
upon announcements to be issued simultaneously with
the American announcement. When Dr. Trip had telephoned

me at 3:30 on the afternoon of October 29, he said that

he had not gotten into touch with us earlier, not
because he had not wanted to cooperate fully but that
he had desired to see how conditions might develop on

his own market following the departure of the florin
from the gold standard. I told him of the talks which
I had had with the Belgian and Swiss Treasuries. It
was understood that I could not ask for an appointment

to see Premier Colijn and himself until J might submit
the matter

- 41 the matter to you and received your instructions.

I called President Trip back at 9:45 a.m.,
October 30, and told him that I could not at that time
indicate a date upon which I might visit him at Amsterdam. He thought it much better to meet in the
Netherlands, where everything could be settled all at
once, than to endeavor to make any arrangements at

Basel. He said that he was already working on a
formula for transactions with the Federal Reserve Bank
at New York, which he would mail to me. He had confirmed

that Premier Colijn would be glad to receive me whenever

I might visit the Netherlands. He mentioned that
Governor Labeyrie had telephoned him the preceding

afternoon, shortly after he, President Trip, had spoken
with me in regard to possible arrangements with the

United States. He made the point very clearly that
he had thus taken the matter up with us on his own

initiative and prior to his receiving any suggestion
from the French.

In my cablegram No. 1064, dated October 30, 3 p.m.,
I gave you the amendments which had been made in the

Swiss declaration, I having received on that morning
the letter from President Bachmann, dated October 29,

1936, which set forth the new text. I also told you
that I had received at noon on October 30 a telegram,
in which President Bachmann informed me that the Federal

Council had authorized the Swiss Finance Department to

sign the declaratio as of October 28.
You

- 42 You telephoned me at my home at ? p.m. on

Sunday, November 1. I let you know the developments

of the week-end, including the receipt of a letter
from President Bachmann confirming his telephone call
and telegram, and informing me that the signed Swiss

declaration should reach me shortly. I told you
furthermore, that M. Bachmann had raised the question

as to whether Switzerland should adhere to the tripartite declaration of September 25 in the same manner
that the Belgian Government had adhered.

You told me that you desired that I proceed to
the Netherlands on Monday with the view to procuring
from the Dutch an arrangement along the lines of the
declarations I had obtained from the Belgians and the
Swiss. You said that you would ask the Department of

State to send me the necessary instructions that day
(the Department's instruction No. 441, dated November

1, 2 p.m., arrived at the Embassy early on the morning
of November 2). You explained that final American
approval had not yet been given to the Belgian and
amended Swiss declarations. We discussed the manner
in which announcements would be made by the American,

British and French Treasuries in the event that
additions might be made to the countries eligible

to reciprocal gold transactions. In my catlegram
No. 1070, dated November 2, 10 a.m., I confirmed

my understanding of certain points which we discussed

by telephone the preceding afternoon. I included in
this cablegram certain reasons which, in my opinion,
made it

- 43 made it important to extend the tripartite agreement

as early as possible. I also told you that I had
telephoned President Trip, who would receive me at
the Bank of the Netherlands the following morning
and would make an appointment with Premier Colijn.

I was, therefore, leaving Paris on Monday noon for
Amsterdam and should be back in Paris on Wednesday
morning.

On the morning of Tuesday, November 3, I called

at the Bank of the Netherlands at 9:45 a.m., and was

received by President Trip. We were later joined by
the ranking Director, M. Beaufort, and the Secretary
of the Bank, M. de Jong. Before leaving Paris I had
received the preceding forenoon a letter dated October
30, with which President Trip had enclosed a memorandum

which he had drawn up suggesting the lines along which

gold transactions might be carried out between his
Bank and the Federal Reserve Bank. I had studied these
on my way to Amsterdam with the view to having in mind

a draft declaration which would be similar to those
declarations already obtained from the Belgians and
the Swiss, and would at the same time include enough

of Dr. Trip's suggestions to satisfy the Dutch. With
Dr. Trip's memorandum and the Swiss and Belgian

declarations before us, the drafting of a Dutch
declaration proceeded quickly, particularly due to the
fact that this could be drawn up in English. The work,

except for typing and final revision, was finished
before MM. Trip and Beaufort and I went out for lunch.
Immediately

- 44 Immediately afterwards we read over the typed copy
and made a few corrections therein.

At 2:45 President Trip and I took the train to
The Hague, where Premier Colijn, with Minister of

Finance Oud present in his office, received us at
4 p.m. I explained to MM. Colijn and Oud the procedure which we were following in our negotiations
with the countries which had indicated an interest

in having gold dealings with us on a reciprocal basis,
and President Trip explained to them the draft document.
MM. Colijn and Oud approved the document, but it was

agreed it should not be signed until I might ascertain

from you the acceptability of the terms thereof. It
was understood that MM. Oud and Trip would be the

officials to sign. After leaving the Prime Minister,
Dr. Trip went with me to call upon Minister Emmet,

who is a good friend of his, but we found him out of
town. We hurried on, therefore, to the railway station,
where I caught the train for Paris.
In my cablegram No. 1075, sent from Paris at 10

a.m. on November 4, I gave you the text of the Dutch

draft declaration and also transmitted certain opinions
which the Dutch officials had volunteered to me. I
particularly mentioned Dutch concern over the French
situation because of the apparent tendency of the French
public to continue to doubt the Government and because

of the lack of prospect for a strong, confidenceinspiring Government to come into power. I added that
President

- 45 -

President Trip felt that the American legislation
providing for a Stabilization Fund and a further cut
in the dollar had an important merit internationally
in that this legislation constitutes a balance to
steady sterling, with the relationship between the
dollar and sterling now more than ever having an
important influence on the currencies of the world.
In a second telegram, No. 1076, sent a 1 p.m.
on November 4, I told you of the receipt of the Swiss
declaration, dated October 28, bearing the signatures
of MM. Meyer, Bachmann and Weber. I also let you
know that there had been a leak to the press from

Switzerland as to the Swiss signing a declaration in
regard to the Anglo-Franco-American monetary arrange-

ment. I also mentioned that M. Baumgartner had
telephoned me as to the French unahppiness over this
leak, which apparently came from the Swiss Federal

Council. I told M. Baumgartner at this time of the
results of my Dutch trip, and he said Minister Auriol
was anxiously awaiting our decision on the three
countries.

I spoke with you at 8:30 p.m. on November 4. I
told you the substance of my two cablegrams sent during
the day, above-summarized, and urged the importance of

terminating arrangements for the addition of the three
countries by Sunday or Monday. I was anxious that this
might be achieved before the Central Bank Governors met

at Basel. You stated that you were anxious to accomplish
the addition

- 46 -

the addition of the three countries, on a three-sided
arrangement with France and Great Britain, but you

were afraid this could not be arranged in such a short
time.

In my cablegram No. 1080, dated November 5, 4 p.m.,

I reported the gratification expressed by the European
financial press over President Roosevelt's reelection
and its consequent optimism over the prospect of

continuing monetary cooperation, following up the

tripartite agreement. I also let you know that I
had been able to inform Minister Emmet fully of my

conversations with the Dutch officials since the
Minister had called at my office while he was in Paris.
On the morning of November 6, I received your
cablegram No. 445 of November 5, 5 p.m., in which

you quoted the draft of a proposed statement to cover

the release of gold for export, not only to the countries
then under discussion, the Netherlands, Switzerland and

Belgium, but also to France and England. In my cablegram No. 1088, dated November 6, 5 p.m., I reported

that, in accordance with your telegraphic instructions,
I had left with M. Baumgartner at the Ministry of
Finance a copy of the proposed statement, and that M.
Baumgartner had promised to discuss the matter with

Minister Auriol and to provide me the following day,
if possible, with a memorandum setting forth such
comment as the French Ministry of Finance might care

to give me upon the draft declaration.
When

- 47 When I left the above-mentioned document with
M. Baumgartner at 3:30 p.m. on November 6, he could

not grasp the exact purpose thereof. He thought a
new declaration, especially superseding the one of
October 13, if issued now, would only confuse people.

He thought it better to hurry up with the addition of
the three countries to the original declaration. If
necessary, we could make some amendment later. M.

Baumgartner was quite willing to accept for the
Ministry of Finance the declarations which I had

obtained from the three countries, he stating that
France would require nothing further as a basis for
granting reciprocal gold treatment to the countries
involved. M. Baumgartner admitted that, as far as
France's present status was concerned, this new

declaration would change nothing. He realized that
the French Stabilization Fund would continue to exist
for some time, but he had no reason to believe that
the French had yet developed the idea that the
Stabilization Fund was to be made permanent. He

promised to discuss the matter with Minister Auriol
and to call me back on Saturday morning, when he would
endeavor to give me a memorandum on the subject.
At noon on November 7, I visited M. Baumgartner.

He had not been able to see the Minister of Finance
since my call on the preceding afternoon, due to
M. Auriol's being engaged on parliamentary matters.
M. Baumgartner had, however, drawn up an informal

letter

- 48 letter, addressed to me, in which he expressed his
personal views. I had asked that the views of the

French officials be set down in writing in order
that there would be no possibility of the slightest
misunderstanding in the premises. I asked M. Baumgartner whether he had any objection to my cabling

his views to you. He said that he had none, provided
that I characterized them as his own views.
In my cablegram No. 1092, sent at 2 p.m. on

November 7, I provided you with a translation of M.
Baumgartner's letter, giving three reasons why he
thought your proposed declaration might cause inconveniences. First, because the impression might be
gained that the October statement was being reversed

for some reason that might not be clear to the French
public; second, because he thought that Belgium could

not subscribe to the declaration as drafted; and, third,
because difficulty or embarrassment might be experienced

if France eventually returned to the normal system of
the gold standard.

On the night of Saturday, November 7, I left for
Basel, where the B.I.S. Directors were having their
monthly meetings on Sunday the eighth and Monday the

ninth. While at Basel I gave an oral reply to
President Bachmann of the Swiss National Bank, who

had written me under date of November 5 to inquire

whether or not his Bank was at liberty to approach the
Federal Reserve Bank of New York in regard to making
arrangements

- 49 arrangements as to future gold and exchange operations.

Since the declaration which I had received in your
behalf from the Swiss authorities had not yet been
definitely approved by you, my answer to President
Bachmann was necessarily negative.

Upon my return from Basel on the morning of
November 10, I filed my cablegram No. 1096 at 10

o'clock, reporting the results of my week-end at
B.I.S. headquarters. I mentioned to you the inquiries
on the part of resident B.I.S. officers as to whether
there might soon be any likelihood of the United States
Treasury releasing gold to the B.I.S. in order that the

latter might have proper facilities for continuing to
help the smaller European Central Banks to rebuild

their gold supplies. I gave you the views as expressed
by Governor Norman upon the gold movement to the United

States, which had been continuing after the consummation

of the tripartite monetary agreement. The Governor
insisted that the Bank of England had all the gold
that it needed or could use. I mentioned the skepticism
of some of my friends in regard to the French making
devaluation a success. In a second telegram, No. 1098,
sent at 5 p.m. on November 10, I informed you of the
nervous condition of the French exchange market and
reported that there was even some gossip as to the

possibility of exchange control.
After returning from Basel I had telephoned M.

Baumgartner at the Ministry of Finance to see if he
could

- 50 could give me the views of the Minister of Finance
upon your draft declaration, which M. Baumgartner

had thought would be possible on that date, as indicated
in the final sentence of my No. 1092, November 7, 2 p.m.
M. Baumgartner told me that Minister Auriol shared

his views on the statements, but that the matter was

so complicated that they desired to study it further.
I talked with M. Baumgartner later in the day, at
5:45 p.m., and he then said that they must await a
document from London, which they expected on Thursday

morning. He asked me to call him at 12:15 on that day.
He said that he had learned that the British were

apparently disposed to interpret your intended statement in a manner different from the interpretation
which he and the French Minister of Finance had placed

upon it. I told you of my call and the postponement
of a decision until Thursday, November 12, in my
cablegram No. 1100, November 10, 7 p.m.

At noon on November 10, Miss Willis, Secretary of
the American Embassy at Brussels, telephoned me that
the Embassy had received an envelope from the Belgian

Minister of Finance for me, and she inquired as to

what should be done with it. I told her to forward
it at once in a plain envelope, registered and sealed.
She did not know the contents cf the letter. on the
morning of November 12 I received the envelope in

question, and in the inner cover, addressed to me, I
found an original letter, dated November 9, 1936,
signed

- 51 signed by the Minister of Finance of Belgium, M. H.
de Man, and directed to you as Secretary of the
Treasury, which was drawn up in exactly the terms of
the draft which had been prepared at Brussels on my

visit of October 28. When I had last talked with
the Belgian officials at Brussels, on October 28, it
had been definitely understood that the letter was not
to be signed until I might be able to inform the Belgian
officials that you had found its terms satisfactory and
that this would render possible the consummation of a
reciprocal gold arrangement between our two Governments.

I had had no further conversation with any one upon this
subject, and when I talked on a subsequent occasion with
the Embassy at Brussels, I found that no one there had
been in communication with the Belgian authorities upon

this subject. The letter, presumably, was signed and
despatched by the Minister of Finance upon his own

initiative.
I called on M. Baumgartner at the Ministry of
Finance at 12:15 on November 12. He told me that he
had received from his Acting Financial Attache in
London, M. F. Le Norey, a Letter to the effect that
London had interpreted your proposed declaration

differently from Paris. The British officials thought
that the new declaration was to facilitate and not to
hinder Belgium's cooperation. I was happy to be able
to show M. Baumgartner the signed Belgian confidential

letter, which I had received just before going to the
French

- 52 French Ministry. He admitted that this evidently
indicated that Belgium would be disposed, confiden-

tially, to give a wide interpretation to the manner
in which the Bank of Belgium acted as "fiscal agent

of the Ministry of Finance," even though it actually
was not fiscal agent but "principal" in gold dealings.
He thought France might now yield, seeing that Belgium

was taken care of, but he insisted that his technical
objections, as he had communicated them to me and as

I had cabled them to you, were still well founded.
He told me that Minister Auriol was "confused" over
this new scheme. M. Baumgartner said that he would

talk with the Minister of Finance again, to let him
know of the letter which I had shown in strictest
confidence. Before talking with the Minister, M.
Baumgartner was also to telephone London to see if

the British had given you their reaction to your
proposed statement, since the letter from M. Le Norcy
was accompanied by a proposed draft of a British

declaration, dated November 9, to be issued in
welcoming the extension by the United States Treasury
of the reciprocal gold arrangements to Belgium,

Switzerland and possibly the Netherlands. Although
M. Baumgartner promised to call me back later in the

day, I did not hear from him; and when I telephoned
the Ministry of Finance at 6:45 p.m., I found that he
had left.
At 10 a.m. on November 13 I telephoned M.
Baumgartner

- 53 Baumgartner that I was anxious to wire to you on that
day the French response to your proposed declaration.
He said that he would see the Minister during the
morning and asked me to call at 12:15. At the
prescribed hour, I called upon him and then returned

to the Embassy, where I dictated a report of our
conversation and had it coded under serial No. 1106,

dated 4 p.m. At 4:15, I put in a long-distance call
for you in order that you might know the French decision.
At 4:55 I was informed that you were absent until the

following week but that if the matter was very urgent
you could be found. M. Baumgartner telephoned me at

a definite answer from the French on the matter of your
proposal be sent to reach Washington not later than
Saturday morning, was received after my cable No. 1106
of 4 p.m. had been despatched.

In my cablegram under reference, I told you that
while Minister Auriol endorsed the views of his

technical assistant, M. Baumgartner, as set forth in
my No. 1092 of November 7, 2 p.m., I had procured the
ore? agreement of the French Minister of Finance to
your proposed statement, as quoted in your No. 445,

November 5, 5 p.m., with one condition. MM. Auriol
and Baumgartner, after learning of the Belgian letter
and of

- 54 -

and of the British willingness to give a very broad
interpretation to the idea of "fiscal agent," did not
desire to interpose objections to the issuance of the
proposed American declaration. Their one condition
was, however, that when your declaration might be
issued, there should be some wording to indicate that

there had been no rupture of the original tripartite
agreement. That is, they desired that the point be
made that the three powers had not revised their
original agreement, but that certain additional
countries had now been found eligible to be added

to the three original parties for reciprocal gold
dealings. In my cablegram reporting the French

decision, I quoted a letter from the British Treasury
to the French Financial Attache at London in regard to
the proposed communiqué by the Chancellor of the
Exchequer.

You telephoned me at my home at 9 o'clock on the

evening of November 13. You referred to the letter
which I had received for you from the Minister of
Finance of Belgium, and you requested that I mail

this at once to you. I told you of my cablegram

reporting the French decision. You felt that you
could meet their worry with respect to the wording of
the release on the one point under reference. The
question was discussed as to whether we could at
once mail to the three prospective members, Belgium,

Switzerland and the Netherlands, the text of the
proposed

- 55 proposed statement and give them a week to agree thereto.

I thought it might be necessary to visit the countries
personally when the time came. I suggested that you

provide me, for further transmission, with the text
of any oral statements which you planned to make at

the time your formal declaration was issued. You told
me that you were seeking on Sunday the President's

approval to your proposed statement and that I should

hear from you on Monday. You were particularly interested to know what had moved the French to consent to

your proposed declaration. I told you that the
principal factors were the British interpretation of
"fiscal agent" and the letter from the Belgian Minister
of Finance. I mentioned to you that Governor Rooth of
the Sveriges Riksbank was coming to visit me between
November 22 and 24, and you said you wanted me to be

sure to see him. In two telegrams sent on November 14
I mentioned the press rumors that the Netherlands was

considering joining the tripartite gold arrangement
and that Swiss adherence thereto was considered

practically an accomplished fact. I mentioned these
rumors as reason for haste in our concluding arrangements with the three countries under consideration and
in issuing appropriate announcements. I told you that
strengthening of the tripartite agreement would be
most welcome to France, considering the bitter parliamentary fight which the Government was having on its

budgetary and financial policies.
In my

- 56 In my cablegram No. 1119, sent at 6 p.m. on
November 16, I mentioned the attention which the

European financial press was giving to the possibility
of the United States restricting foreign purchase of
American securities.
At 9 p.m. on the evening of November 16, you
telephoned me at my home. You told me that you had
prepared a new declaration, which you were cabling me

that night, which was intended to supplement, and not
to denounce, the statement of October 13, and that you
were anxious to get complete adherence to this new

declaration in order that it might be announced by
you at 4 p.m. on Monday, November 23. That is, one
week from the date on which you spoke to me. It was
understood that I was to take no action on the declaration which you were cabling me until you might telephone

or wire me further to the effect that the President,
whom you were seeing the next day, had given his

definite approval thereto.
On the morning of November 17, I received your
rush cablegram No. 462, sent at 12 midnight, November

16, wherein the draft declaration was incorporated.
You telephoned me at 3:40 p.m. on November 17.

You told me that the President had approved your draft
statement as embodied in the cablegram which you had

sent to me the preceding night. I told you that
Minister Auriol was out of town, but that I was seeing
M. Baumgartner at 4:15, and that the latter would

telephone to Toulouse in an effort to obtain M. Auriol's
approval

- 57 -

approval to your new declaration. I was sure that
I could procure the French adherence to your new plan,

especially since it embodied the idea of not cancelling
the declaration of October 13. I agreed that this
statement constituted an improvement over the preceding

draft.
You outlined to me the schedule which you desired

to be followed. You said that you would like to have
the Swiss and the Dutch get out a release on Sunday

night, November 22, for publication in their morning
papers of November 23, indicating the adherence of
those Governments to the tripartite agreement of
September 25. These declarations of adherence should
be phrased similarly to that which Belgium had made
on September 26, and should be transmitted through

the respective Foreign offices to the three powers.
The Department of State should receive such telegrams

not later than Sunday, so that the statements could
appaar in American papers on Monday morning. In

answer to your inquiry as to whether I had a copy of

the Belgian declaration, I told you that I had a press
copy thereof, and that I would get an official copy of
the complete statement from the French Ministry of

Finance for the guidance, if necessary, of Switzerland
and the Netherlands.

You stated that the United States, France and

Great Britain would, according to your schedule, give
out on the night of Monday, November 23, releases for
publication

- 58 publication on the morning of Tuesday, November 24.

Your statement in regard to your new policy would be

issued at that time. I asked if you desired that you
receive, prior to their issuance, the texts of the
statements which the European countries were going to

give out. You thought this was not necessary with
respect to the statements of adherence to the September
25 agreement on the part of Switzerland and the

Netherlands, since they were simply to follow the

Belgian text, but you did desire, if at all possible,
to have any advance copies of the announcements which

the countries planned to make with respect to the
reciprocal gold arrangements which were being consummated.

It was agreed that I should cable you on the
evening of November 17 the results of the interview
which I was to have at that time with the French
Ministry of Finance. It was not necessary to telephone.
As soon as you received a reply from the British, you
would telephone me, and I could then begin to effect
the necessary arrangements with the three prospective

Governments. I told you that I thought it might be
necessary to visit the officials in the three countries,
particularly the Belgians, who were most vitally concerned with the new declaration, and the Dutch, who

had not yet signed their original technical declaration.
Furthermore, it would be quite difficult to make the
Swiss understand over the telephone just what was
involved

- 59 -

involved, and to procure an official Swiss adherence

to the tripartite declaration of September 25, since
the Minister for Foreign Affairs would have to be
approached on this subject by my two contacts, the
Minister of Finance and the President of the Swiss
National Bank. You said that the American announce-

ment in regard to the addition of the new countries
would be very simple, in the same manner as the

announcement was made as to the eligibility of France
and England. At my suggestion you agreed to cable me
the text of such a brief announcement.
In my cablegram No. 1121, sent at 7 p.m. on

November 17, I told you that I had at 5 o'clock that
afternoon submitted to M. Baumgartner at the Ministry
of Finance the proposals contained in your No. 462 of
November 16, 12 midnight, which, according to cablegram

No. 463 of November 17, 2 p.m., could be definitely

taken as the basis for negotiations. I told you that
M. Baumgartner had not been able to get into touch with
Minister of Finance Auriol, who was coming by motor car
from Toulouse to Paris. My friend was confident that
the Minister would approve the statement and arrangements described in your cablegram, and he promised to
give me definite word before noon on Wednesday.

Inder cover of a note dated November 17, 1936,

I mailed you in our diplomatic pouch the original text
of the communication addressed to you under date of

November 9, 1936, by the Minister of Finance of
Belgium.

- 60 Belgium.

M. Baumgartner telephoned me at 10:30 on the

morning of November 18 that Minister of Finance Auriol
had returned to Paris and had found himself in complete
agreement with the proposals as set forth in your
cablegram No. 462 of November 16, 12 midnight. I
gave you this information in my cablegram No. 1123,
sent at 12 noon, November 18. I informed M. Baumgartner

of the contemplated form of press release quoted in
the Department's No. 465 of November 17, 4 p.m.

I put in a long-distance call for you and obtained
communication with you at 2:45 p.m. on November 18. I

gave you the information in regard to the French approval,

the results. You said to telephone you, if possible,
and confirm by cable, and for me not to hesitate to
use the telephone freely. It was understood that I
could not make any arrangements with the Dutch or Swiss

officials until I had procured the necessary approval
of the Belgian officials to the new draft statement.
If such approval was obtained, however, I was to
endeavor to effect the necessary errangements in the
Netherlands on Friday and in Switzerland on Saturday.
You were agreeable to my plans and told me to leave
Paris

- 61 -

Paris that night. You had not yet received the
British response to the declaration. 'It would be
necessary that I have word of this before I could
talk with the Belgians. I was, however, to prepare
to depart from Paris and await word from you in Brussels,
if necessary, before seeing the officials there.
At 3:45 on the same afternoon, November 18, you
telephoned me that you had heard from the British and

that your statement was found entirely agreeable to
the Chancellor of the Exchequer, provided it was

acceptable to the Belgians. I was, therefore, to go
on to Belgium that night and to keep you informed
currently as to the results of my conversations.
Consequently, I telephoned at once, at 4 p.m., to
Secretary Baudewyns of the National Bank of Belgium
(Governor Franck was on a holiday in Egypt) and arranged

to see him on the following morning at 9:45. He was to
take me to see Minister of Finance de Man. At 5 o'clock
I telephoned M. Baumgartner, and he said that it was

also his understanding that the British were entirely
in agreement with the French and Americans on the

declaration. I told him of my proposed itinerary. He
asked that I telephone him from Brussels as to the
result of my negotiations there, and he agreed to be
at the Embassy at 11 o'clock on Sunday morning, November

22, to learn the complete results of the trip and to
plan for the necessary French announcements.

Consequently, I left Paris at 6:10 on the evening
of

- 62 of November 18 for Brussels. At 9:15 on the morning
of November 19, I telephoned Ambassador Mo.ris to let

him know that I was in Brussels and to inform him of
my plans. At 9:45 I went to the National Bank of
Belgium, where I was received by Secretary Baudewyns

and M. Mahieu, a Manager of the National Bank of Belgium

who was acting in the place of Governor Franck during

the latter's absence in Egypt. I showed these two
officials a draft of your proposed statement and
informed them that the French Ministry of Finance had

considered your plan acceptable, as had the British,
subject to Belgium's finding the arrangements and

declarations agreeable. I told them of the plan to
obtain the adherence of the Netherlands and Switzerland

to the tripartite declaration, and then to add these
two countries, along with Belgium, to those nations

entitled to gold reciprocal treatment. I made the
point, however, that I could not proceed further with
this plan unless Belgium's approval in the premises

could be obtained at once. I also made the point that
this new declaration had been drawn up specifically to
meet the Belgian situation. The two officers of the
Belgian National Bank asked to be permitted to study
the documents. I was to return at noon to the Bank,
and from there we were to proceed to the Ministry of
Finance to confer with M. de Man.
Upon leaving the Bank at 10:30, I proceeded to the
Embassy, where I explained developments to Ambassador
Morris.

- 63 Morris. I called back at the Bank at 12 noon, and
MM. Baudewyn and Mahieu accompanied me to the Ministry

of Finance, where we were met by M. Warland, the

General Manager of the Treasury. Before we entered

the private office of the Minister of Finance, I
learned that the Minister had signed and had despatched

his letter of November 9 to you without the knowledge

of any of his technical advisers or of the officials
of the National Bank. This point came out when, as
we were about to go into M. de Man's office, M. Warland
told me he was opposed to the idea of the Government's

giving such a statement, guaranteeing the operations
of the National Bank of Belgium, as had been envisaged
in the draft letter which had been drawn up when I had

been last in Brussels. M. Baudewyns laughingly remarked to M. Warland that his objections were too late
since the Minister had already signed the necessary

letter.
To Minister de Man I explained the situation, as
I had earlier in the morning at the National Bank of
Belgium. He understood that your proposed declaration
was to supplement that of October 13 and he took no

exception to the cancellation of your statement of
January 31, 1934. He indicated definitely that he
stood by and confirmed the original Belgian declaration
of October 17, as well as his Letter of November 9.
His one question was in regard to the manner in which
you

- 64 you might find it necessary to explain the manner in
which Belgium had been fitted into the reciprocal
arrangements. When we were discussing this point, M.
de Man volunteered some phrases which I took down in

his presence. If this point could be cleared up, he
was quite agreeable to enter the arrangement. In order
to expedite the matter, I told the Minister of Finance
that I would telephone you early in the afternoon and
hoped that I could give him definite assurance on his
point in the course of the day.
I proceeded from the Ministry of Finance to the
Embassy, where I placed a call for you for 2:30 p.m.,
and then lunched with the Ambassador. When our call
came through, I summarized to you my conversations of

the day and emphasized the one point of possible

difficulty. You told me to inform the Belgian Minister
of Finance that you now understood exactly what the

Belgian situation was and that you would do your very
best to Avoid any embarrassment insofar as the American
press was concerned.

At the conclusion of our conversation, I called
the National Bank of Belgium, where I spoke to Secretary
Baudewyns by telephone and asked him to communicate your

reply to Manager Mahieu, and particularly to the Minister
of Finance. It was understood that if M. Baudewyns did
not call me back within a few minutes, the matter could
be considered as settled. Since I heard no further word
from him, I proceeded with my arrangements. I had
explained

- 65 explained to the Belgians the proposed schedule for

press releases. I had left them copies of all available documents, and had promised to communicate with

them further from Paris on the following Monday
morning.

From the Embassy I telephoned President Trip of
the Netherlands Bank at Amsterdam and told him I was

proceeding to Amsterdam that night. It was arranged
that he should receive me the following noon, and

where
was
Colijn
and to luncheon.
that we were then to proceed together to The Hague

IDutch
ourtoto
to earlier
to from the

as as signature
the

declaration through, visit explained the Finance I officials it to declaration telephoned it the Minister would to of Netherlands. to September Dr. be their Professor be which Trip arranged necessary Oud adherence that, had 25, receive Bachmann, for been for Prime well drafted obtain the us Minister President plans tripartite after their on my carry of

Swiss National Bank. Professor Bachmann was at the

office of his Bank in Zurich and told me that he
would be there on Saturday forenoon. Fortunately, Dr.
Meyer, the head of the Swiss Department of Finances and

Customs, and also President of the Swiss Federal Council,
was to visit Professor Bachmann at the Bank in Zurich at
9 o'clock on Saturday morning. Since these were the two
Swiss officials whom it would be necessary for me to see,

it was therefore arranged that I should come to the Bank
in

- 66 in Zurich as early as possible on Saturday morning.

President Bachmann, who is a very early riser, told
me that he hoped I could reach the Bank at 7 a.m. so
that we could have our discussion before the Finance

Minister arrived. I stressed the importance of the
Swiss being ready to adhere formally to the tripartite
declaration of September 25 and the urgency for speed

and also of my itinerary.
Before leaving Brussels on the evening train for
Amsterdam, I filed with the Embassy a cablegram report-

ing fully to you my visit with the Belgian officials.
Proceeding from Brussels, I arrived in Amsterdam

on the night of November 19. I called at the Bank of
the Netherlands the following noon, where I was received

by President Trip and Director Beaufort. I reviewed
developments to date and gave them copies of all

documents pertinent to your proposed declaration. In

order to simplify matters and to avoid any delay in
The Hague, Dr. Trip and I drew up a short draft of a
statement which we thought would suffice as indicating
adherence of the Netherlands to the tripartite Reclaration of September 25. We talked straight through
until time for the train to The Hauge, without having
any

- 67 -

any lunch. I was sincerely appreciative of the
assistance which Dr. Trip was giving me, since he was
very busy on the day of my visit, which also happened

to be his sixtieth birthday.

Upon our arrival in The Hague, we went directly

to the office of Prime Minister Colijn, where Minister
of Finance Oud also joined us. MM. Oud and Trip signed

and delivered to me their technical declaration in
exactly the terms which had been drafted on my previous
visit and had been quoted in my cablegram No. 1075 of

November 4, 10 a.m. Prime Minister Colijn took a very
active interest in the discussions and insisted on

reading to us the full text of the declaration of
September 25 before consenting to adherence thereto.

After he was satisfied in his own mind as to the entire

situation, he called to his office an official of the
Dutch Ministry for Foreign Affairs and instructed him
to send cablegrams at once to the Dutch diplomatic
representatives at Washington, Paris and London to

deliver to the respective Foreign offices, not later
than Saturday afternoon, the message of Dutch adherence

in the terms which Dr. Trip and I had drafted. The
schedule for press releases was then confirmed and it
was agreed that I should telephone Dr. Trip on Monday

morning to give him the latest news in regard to
Switzerland and any further press communiques which I

might have by that time.
After leaving the Prime Minister, I proceeded to
our

- 68 -

our Legation, where I explained my visit to Minister
Emmet. I put in a telephone call for you and gave
you the above facts. I also sent a cablegram
confirming the report which I had given you over the
telephone.

From the Legation I went directly to the railway
station and got the 5:25 train to Brussels. Normally
there should have been a margin of 25 minutes in

Brussels, but the Hague train was 10 minutes late on

arriving, so my 15 minutes were barely sufficient to
get across Brussels and catch the night train for
Switzerland. I changed trains at Basel in the arly
hours of Saturday morning, November 21, and reached the

National Bank of Switzerland at Zurich at 8 a.m.
President Bachmann and his assistant, M. Pfenniger,

who had met me at the train, told me they had already
been at work for some time. I explained to them our
plans for further statements and gave to them copies
of such draft announcemonts as I had left with the

Belgian and Dutch officials. We then drafted a
telegram to the Swiss Ministry for Foreign Affairs
at Bern, directing that Ministry to send the necessary
telegraphic instructions immediately to the Swiss
diplomatic representatives at Washington, Paris and
London, for delivery to the respective Foreign Offices
not later than Sunday forenoon. In this telegram we
used the same text of adherence to the general

principles of the tripartite declaration of September
.

25.

- 69 25 that had been employed ir. the Netherlands. TO

have followed the Belgian example of preparing a

statement in almost identic terms with the tripartite
declaration would have involved delay in cabling,
because of the length thereof, and would have added

little to the strength of the declaration.
When President Meyer arrived at the Bank at 9
o'clock, he promptly approved the telegram which had

been drafted, and this was despatched to Bern. To the

Swiss officials I explained in detail the schedule for
press releases and promised to telephone President
Bachmann from Paris on Monday morning any further

available texts of communiqués. I called at our
Consulate General at Zurich after the foregoing
arrangements had been completed, and from there

telephoned Minister Wilson at Bern at 11 a.m. to

inform him of the negotiations. I lunched with MM.
Bachmann and Pfenniger. In the afternoon, I reached

you by long-distance and gave you the Zurich story. I
confirmed this by cablegram from the Zurich Consulate

General. I left Zurich on the night train and arrived
in Paris on Sunday morning.

In the conversation which I had with you at 4 p.m.
from Zurich on Saturday afternoon, you told me to
telephone you from Paris at 5:30 on Sunday afternoon

to give you the latest news. You told me that Judge
Moore was following my cablegrams and was much interested

in the entire situation. I suggested that you have the
State

- 70 State Department be on the watch for messages from the
Dutch and the Swiss Legations in Washington and forward

these to you promptly. You were pleased with the
smoothness with which our arrangements had been made.

I told you that I thought it would have been impossible
to have completed the arrangements in any manner other

than by personal visit, since so many different officials
were involved in each country and since it was so much

easier to explain the various phases of the situation
face to face, with documents available, than to attempt
to do this by long-distance telephone. You asked me
when I was to see the Governor of the Bank of Sweden.

I told you that Governor Rooth would be in to see me
on the following Tuesday or Wednesday. You were pleased

over this prospect.
As previously arranged, M. Baumgartner called at
my office at 11 o'clock on Sunday morning, November 22.

I told him of the results of my travels. He made
arrangements to receive from the French Foreign office,

as soon as they might arrive, the declarations of the
Dutch and Swiss Governments. M. Baumgartner submitted

to me the text of the communiqué which the French

proposed to give to the press at 9 o'clock on Monday

night for publication Tuesday morning, and I incorporated this in my cablegram No. 1138, November 22, I p.m.
M. Baumgartner learned that the Dutch declaration
had already been received through the Dutch Legation
in Paris. When I telephoned him at 5:15 on Sunday
afternoon

- 71 afternoon, he said the Foreign Office had not been

able to find any one at the Swiss Legation but that

there was still plenty of time for their declaration
to be received.

After talking with M. Baumgartner, I put in a
call for you and obtained communication at 5:45 p.m.

I gave you the substance of the telegram which I had
sent at one o'clock, and we discussed various details
of the publication of the announcements. You incidentally mentioned the idea of M. Baumgartner possibly

visiting the United States for one week. I was against
the idea since such a visit on the part of this French
official would attract too much press attention;
furthermore, I did not think it was an appropriate
time for such a visit, and particularly by an official
who was just being relieved of his important position,
even though a promotion was involved, because of

objection to him on the part of influential politicians
in Premier Blum's own party. I have always told you
of the high personal regard which I hold for M.
Baumgartner, and I have appreciated throughout our

negotiations his fairness and desire to cooperate with
us. You also toId me confidentially of the hint received
by my colleague in London that the British might be
inclined to look upon Sweden as their particular charge.
Nevertheless, we were interested in getting this country
lined up in our reciprocal arrangements. The possibility
of my visiting the United States at a later date was
discussed

- 72 discussed.

I telephoned M. Baumgartner at 10 o'clock on
the morning of November 23. I suggested one or two
changes in the text of the French communiqué that was

to be given out that night, in order to bring this
more exactly in line with the English text of the
American announcement. I told him that you had
informed me by telephone the preceding day that you
had received both the Dutch and Swiss announcements
from their Missions in Washington by noon on Saturday,

and that you would give release thereto at 10 o'clock
that morning, Monday, November 23. Your own communiqué

was to be given to the press at 4 p.m. M. Baumgartner
confirmed again that the French communiqué would be

given out here at the corresponding hour, namely,
9 p.m.

At 10:15 a.m. I telephoned President Trip at
Amsterdam. I read him the text of the French communiqué and confirmed the hours for giving notice to the
press. He was much pleased over developments and

congratulated me on the results of my trip. He said
everything was in order so far as the Netherlands was
concerned. I telephoned President Bachmann of the Swiss

National Bank at Zurich in the above sense at 10:45 a.m.,
and he thanked me very generously. At 11:30 a.m. I got
telephonic connection with Secretary Baudewyns of the
Belgian National Bank at Brussels and gave him the

pertinent information. He was very happy over the
successful

- 73 successful termination of our negotiations and he said
he would pass the word on to the appropriate officers
in the Ministry of Finance and his own Bank. He hoped
our cooperation would continue. At 12:30 M. Baudewyns
telephoned me back and asked me to read to him once
more the whole text of the French communiqué in order

that his secretary could take it down.
In my cablegram No. 1140, November 23, 5 p.m., I
summarized the day's developments and let you know

that the Paris financial press carried correct reports
from Amsterdam and Bern of the official adherence of
the Dutch and Swiss Governments to the general

principles of the tripartite declaration of September
25. I also told you that official announcement had
been made of the appointment of M. Baumgartner as

General Manager of the Crédit National. When I had

talked with M. Baumgartner during the forenoon, I
had asked him about the outlook in France, and he
thought there might be a quiet period prior to the
rush which would accompany the passage of the budget

the last week in the calendar year.
You telephoned me at my home at 2:15 p.m. on

November 24. You told me that there had been a good

press reaction in the United States to the new announcements, although naturally not in such sensational manner
as the original declaration of September 25 was greeted.
I told you that the communiques of the French and

British Treasuries had been carried in full in the
European

- 74 European financial press and that comment was entirely

complimentary and hopeful as to the future. I also
summarized to you the conversation which I had had

during the forenoon with Governor Rooth of the

Sveriges Riksbank. You mentioned, incidentally, that
you did not desire that I return to the United States
before January.

In my cablegram No. 1142 of 5 p.m., November 24,
I gave you certain press comment on the extension of

the tripartite arrangement, and I reported in detail
my lengthy conversation with Governor Rooth. It was
understood that no decision would be reached by the
Scandinavian countries with regard to adherence to

the tripartite declaration until after the meeting,
to be held at Helsingfors on December 12, of the
Central Bank Governors of the four countries, Sweden,
Norway, Denmark and Finland.

In my daily telegrams I continued to keep you
informed upon press comment with respect to the new

additions to our reciprocal gold arrangement, my
message No. 1146 of November 25, 5 p.m., having con-

tained particularly pertinent remarks. My cablegram
No. 1155 of November 27, 6 p.m., reported the growing

strength of the Dutch florin following the adherence
of the Netherlands to the tripartite declaration, and
my reports since that date have kept you informed of
the remarkable strength of this currency, as well as

the faithful efforts of the Dutch Stabilization Fund
to hold

- 75 -

to hold the florin at a fair level, which certainly
reveals not the slightest desire to depreciate that
currency any further than may be reasonably necessary

to permit a bearable equilibrium.
My message No. 1167 of 5 p.m., November 20,

reported the resolution adopted at Prague by the
Central Bank Governors from Czechoslovakia, Yugoslavia

and Rumania, stressing the need for definitive monetary

stabilization, urging solution of the problem of
international indebtedness, and recommending an

international examination of general methods of
payment. I also mentioned a press report from Warsaw

to the effect that the Polish Minister of Finance was
strongly opposed to the devaluation of the zloty.
On the morning of December 1, I visited M.

Cariguel at the Bank of France. We talked over the

far been able to make little use, since devaluation,

of the facility for procuring gold in New York, in
accordance with the terms of the tripartite arrangement.
He said it was the handling charge of one-quarter of one
per cent which made it too expensive for him to deal in
gold on our market in present dircumstances. He figured
that even to earmark gold at New York would cost about

10 centimes on the dollar, while to ship it the onequarter of one per cent charges made a difference of
about

- 76 -

about 32 centimes on the dollar. He said that due to
the necessity of holding the franc at a very fixed
rate at the present he could not afford variations
which would permit payment of these charges. He did
not make these remarks, he assured me, in any sense

critical of our regulations but more in an apology for
his failure to have had recourse to American gold

facilities. He stressed to me his desire to trade with
the Federal Reserve at New York whenver and to as great
an extent as may be possible.
As mentioned in my cablegram No. 1184 of December

2 and various other messages, the Lombard Street
editor of the London FINANCIAL NEWS has from time to

time argued that the pound sterling was overvalued

against the dollar and that we were not following a

fair policy in holding the dollar-sterling rate around
4.90 by gold purchases in London. I should remark that
this view has not been expressed recently by any other

of the leading British financial journals, insofar as
I am aware, and my official contacts of the Bank of
England and the British Treasury have not said a word

on this point to me in any of our talks since the
arrangement of September 25 was announced.

From the beginning until the middle of December,

there were various reports current here in regard to
a prospective offer by France in settlement of the
war debt to the United States and of possible French

borrowing in the United States. I gave you this
current

- 77 current gossip as it developed.
You telephoned me at my home at 3:45 p.m. on
Sunday, December 6. You asked about the French situ-

ation in general and about French views on the English
succession crisis. You also asked whether the war debt
talk had quieted down here. You mentioned the possi-

bility of my future cooperation with your Treasury.
At 3 p.m., December 8, Sir Frederick Phillips,
Undersecretary of the British Treasury, who had been
in Geneva for some days attending a meeting of the
Budget Committee of the League of Nations, called
on me while en route through Paris to London. This
was the first occasion on which Sir Frederick had ever

visited me in Paris. As you may recall, I was a member
of the American monetary group at the Preparatory
Conferences at Geneva in November, 1932, and February,

1933, where Sir Frederick Phillips was the British
representative. At that time I became well acquainted
with him, and on three visits to London, made within
the past year under your instructions, I have had
the pleasure of seeing Sir Frederick, once at the
Bank of England, and twice at the British Treasury.
Since there had been a little question as to the
propriety of my calling on Sir Frederick in London, I
was quite pleased that he apparently was not himself
concerned over such a question, and was good enough

to return my call on his first visit to Taris. My
cablegram No. 1216 of 7 p.m., December 8, reported
the

- 78 the conversation which I had with Sir Frederick and

indicated his concern over the position of the French

Stabilization Fund. Sir Frederick was particularly
pleased when I gave him a copy, which I had just

received that day, of your statistical publication
on capital movements. You had told me that you had

sent a copy directly to the Chancellor of the Exchequer, but Sir Frederick had, of course, not seen
this, being absent on the Continent. He remarked that
the publication appeared to contain information of a
type which he said he had frequently but unsuccessfully
sought to obtain on his own market.
On the forenoon of December 9 I visited M. Cariguel
again at the Bank of France, and in my cablegram No.

1219 of 5 p.m. I reported his further remarks, particularly concerning his problem of dealing in gold on the
American market. In this message I mentioned, incidentally, the rumor that M. Georges Bonnet might be named
French Ambassador to the United States to undertake

war debt negotiations. I also told you that I had
received from Governor Rooth a letter requesting
certain data to supplement the information which I

had given him on his visit to Paris regarding reciprocal
gold arrangements. I telephoned him at Stockholm the

next morning to give him part of the information which
he desired, and mailed an envelope, which he was to

find at Helsingfors, giving him certain documentary
information.
On the

- 79 On the evening of December 9 I visited M. Rueff
at the Ministry of Finance, who had succeeded M.
Baumgartner as Director of the General Movement of

Funds. Without making the slightest reference to

Sir Frederick Phillips, I cautiously and unofficially
let M. Rueff know the gossip that was circulating in
regard to the possibility of France's being obliged
to resort to exchange control, and emphasized the
seriousness of such a blow to the arrangements for

which we had all worked. He at that time gave me
assurance that steps would be promptly taken towards

liberalizing the French gold policy, which he thought
would constitute an important step forward in general

recovery. I informed you of this interview in cablegram No. 1222, filed at 9 p.m. on December 9. On the

following day I telephoned Sir Frederick Phillips in
London and gave him a confidential hint as to prospec-

tive changes in French policy. He appreciated this
service very much and indicated his desire to continue
to cooperate with me. As my messages reporting conver-

sations with him have revealed, most particularly the
cablegram which I sent on August 28, wherein I told
you what the British attitude would be in the event of
devaluation of the franc, Sir Frederick talks to me
with considerable directness, and so far has given me
absolutely no misleading information.
On December 15 I sent at 10 a.m. my message No.

1255 recounting my week-end visit to Basel, where the
B.I.S.

- 80 -

B.I.S. Directors had held their monthly meeting. I
shall not summarize this message, which I made longer

than usual in the hope that a detailed picture of the
situation over here might be of convenient reference
to you just at the time the President was returning.
I was happy to record therein the pleasure which the
heads of the Central Banks of the countries most
recently added to our reciprocal gold agreement
expressed over the facilities which had been extended
them through the announcements of November 24 and over

the favorable public and press reception of these
announcements. I mentioned Governor Norman's remarks

about the American problem with respect to foreign

capital. I gave various views in regard to the French
situation, stressing the concern of certain conservative
observers with respect to the possibility of France's
recovering that confidence necessary to procure a

repatriation of capital, a dishoarding of savings, and
a rise in the rente market, all of which are essential
to assist the Government to do the heavy borrowing

which will be required over the coming year. Dr.
Schacht, as I reported, was much more reasonable at
the December meeting than he had been in October and

November, and I believed I sensed a genuine desire on

his part to try to fit into international monetary
arrangements as soon as it is at all possible for him
to find an excuse to take such a step. I am convinced
that if he obtained some satisfaction with respect to
his

- 81 his advocacy of raw material sources for Germany, he

would promptly "align" the reichsmark, just as Italy,
after her success in Ethiopia, devalued the lira.
My cablegrams since December 15 have stressed the

continuing strength of the Dutch florin and the operations of the Dutch Stabilization Fund, through
purchasing sterling and dollars, towards preventing a

rise in the Dutch currency. I have recorded the
issuance of the French National Defense loan in an

effort to procure the surrender of gold and the conver-

sion of gold deposit certificates and of the Auriol
"baby" bonds. I have recounted the progress made in
the French Parliament on fiscal and budgetary

legislation. The outlook now is that the budget for
1937 will be passed without too much difficulty by the
end of the calendar year. I have reported the favorable
impression created in Europe by your plans for gold

"sterilization."
Since talking with President Bachmann at Basel
on December 14, I have received from him a rather long

letter referring to certain technical points which he
had raised with the Federal Reserve Bank of New York

in regard to gold dealings. I told President Bachmann
when I was last in Basel that I might possibly be
visiting Washington within the next few weeks, and I
promised to discuss informally with the appropriate

officials in the United States the technical points
which he raised, if he was willing to let the matter
rest

- 82 -

rest until I might make the trip. I am, therefore,
holding the letter tentatively without action. If
I learn within the next few days that I am not likely
to visit Washington early in the year, I shall forward
copies of the letter, in English translation, to you
for such attention as the matter may merit.
In cablegram No. 1287 of December 22 I reported

the decision of the Central Bank Governors of Greece,

Yugoslavia, Rumania and Turkey to the effect that they
were unable for the moment to adhere to the tripartite
understanding.

I have today, December 28, sent you cablegram No.

1296, dated 11 a.m., in which I referred to my cablegram
No. 1142 of November 24, 5 p.m., and quoted to you the
pertinent paragraphs from a letter dated December 23,
in which Governor Rooth of the Sveriges Riksbank gave

me his summary of the opinions expressed at Helsingfors
on December 12 by the Governors of the four Scandinavian

Central Banks in regard to the tripartite declaration of
September 25, 1936, and the subsequent developments

towards supplementing and implementing this declaration.
I am sure you were pleased to see the acknowledgment

of the debt of gratitude which these Central Bankers

felt was due the United States for the initiative
which our Government had taken in the tripartite and
subsequent arrangements. On the other hand, it is

disappointing to note that there is, in the opinion of
Governor Rooth. apparently little immediate prospect
of any

- 83 of any one of the four countries adhering to the
tripartite arrangement. The reasons given for this

attitude are chiefly that: (1) the four countries are
endeavoring to stand together on monetary questions,

and no one of them is inclined to act unless the

others act similarly; (2) because of exchange control,
Denmark is not free at present to give an effective
adherence to the tripartite declaration and the
technical working thereof; (3) Sweden at least is
satisfied with the facilities granted by London for
gold dealings on that market, irrespective of the
question as to whether Sweden adheres to the tripartite arrangement. In my conversations with Governor
Rooth, I have made it clear that we were not approaching

any of them or soliciting their adherence, although we
should naturally be delighted if they might volunteer
their desire to cooperate. In the circumstances, I
see nothing further to be done for the present with
regard to procuring the adherence of one or more of

the Scandinavian countries, but I do not feel the
matter should be forgotten. I have some confidential
ideas on the Scandinavian situation which I will
communicate to you at an early opportunity.

In conducting the negotiations which I have outlined,

perhaps in too great detail in this long letter, I have
been impressed by the favorable reaction of the officials
in the smaller countries, Belgium, the Netherlands and

Switzerland, to our personal approach. That is, in the
past

- 84 past, these countries have felt that in most instances
they were obliged merely to follow along after the
great powers, and were shown no individual consideration.

When, for instance, the late Governor Strong of the
Federal Reserve Bank of New York and, more recently,

Governor Harrison, have visited Europe, they have not

called at the small capitals, but the Governors of the
Central Banks situated therein have been obliged to
make the pilgrimage to Paris or London if they desired
to have contact with the American representative.
Consequently, the monetary authorities in these three
countries have not endeavored to dissemble their
pleasure at receiving me, as your personal representa-

tive, and at having the knowledge that through a

telephone call from their capitals I could inform you
of their sentiments and obtain your prompt reaction to
their individual problem.
While I have observed your desire that our agree-

ments be negotiated with Treasuries, I have in each of
the three countries recently added to our group made
my approach through the Central Banks. The reason

therefor is quite simple. I have had the pleasure
of meeting at Basel over several years the Central
Bank Governors in each country concerned and have, on

trips made in your behalf, visited them at various
times during the last three years. In each of these
three countries it is the Central Bank which has been
or is charged with the management of the Stabilization
Fund.

- 85 -

Fund. Consequently, when I have called in the city
where the Central Bank is located, I have been
welcomed by the Central Bank Governor, and the latter
has arranged the required contact for me with the

Minister of Finance and with the Prime Minister, in
each of the three countries. This has given me direct,
immediate and confidential access to the officials with
whom it was necessary that negotiations be conducted.
On the other hand, the Central Bank Governors have,

I believe, been a little pleased to be the intermediaries through which our approach to the higher

officials was informally made. While I do not suggest
the slightest criticism of the formalities which must

usually attend straight diplomatic negotiations, I
respectfully submit that the direct method which we
followed in our informal arrangements with the three
countries concerned has been found effective.

Faithfully yours,

H. Merle Cochran,

First Secretary of Embassy.

HMC/wgs

Paris, December 28, 1936.
PERSONAL AND

COMPIDENTIAL

The Honorable

Henry Morgenthau, Junior,

Secretary of the Treasury,
Washington, D. C.
Dear Mr. Morgenthau:

In my letter dated October 26, 1936, I provided
you with a chronicle of events culminating in the
tripartite monetary arrangement of September 25, 1936,

and reported the immediate results thereof, up through
October 4. In the present communication I shall

continue this chronoile, giving particular attention
to the implementing of the tripartite arrangement to
permit of gold reciprocity between the United States,
France and England, and to the supplementing of the
errongement between these three countries to include
Belgium, Switzerland and the Netherlands.

I telephoned you at 4 p.m. on October 5 and I sent
a p.a. my cablegram No. 968, which confirmed the

- I had given you over the telephone. This dealt
principally

principally with the devaluation of the Italian lira
and the activity on the Paris stock market. In my
telegram I also included an expression of opinion
obtained by telephone from Dr. Jacobsson at the

B.I.S. with respect to Italian and German monetary

policies. The B.I.S. observers approved of Italy's
step, and thought Germany was making a mistake in not
endeavoring to cooperate in some manner with the

tripartite arrangement. When I gave you the information which I had obtained here in regard to Italian
devaluation, you indicated that this was not in strict
accordance with the version set forth in a cablegram
from Ambassador Phillips at Rome. You asked that I

procure for you specific information in the premises.

After talking with you I got into touch with Dr.
Pennachio, the Bank of Italy representative in Paris,
and asked him to provide definite facts on the monetary
step that had been taken in Italy. While Dr. Pennachio
had received considerable information on this subject,
he was anxious to be of direct service and telephoned
Governor Azzolini of the Bank of Italy at Rome. Later

in the evening I talked with you, at 8:45 p.m., and gave
you the official information, as relayed through Dr.
Pennachio. Before I spoke with you on this occasion,
I got into touch with M. Cariguel at the Bank of France
and found that he had done a good business in obtaining

sterling on that day, but that there had been few dollars
in the market. He had been able to obtain some gold
against

against dollars in London.
When I talked with you on the night of October 5
you said that you desired that I let the French know
that you were working on the arrangement to yield gold.
You reminded me that there had been three parties to
the monetary arrangement of September 25. In view of

this partnership you thought it fair to give England
the same facility for gold as France. You said you
were seeing Mr. Mallet, the British Charge d'Affaires
at Washington, to see if his people were interested.
You had told your press correspondents that any technical arrangement would be made public. You were planning
an arrangement which should be on a reciprocal and on a

twenty-four hour basis. You desired to find out whether
the French wished to make an announcement of reciprocity

simultaneously with you. You hoped that the three
original parties could stand together on this new

matter. Your declaration would be an amplification of
the statement of January, 1934. You did not insist that
there be declarations from the French and British, but
you did state that you were obliged to make an announce-

ment. I told you that there was a French cabinet meeting
that night at which the question was to be decided as to
the application of a tax of 50 per cent on market transactions made just prior to devaluation. I was to see
the Minister of Finance at 9:30 the following morning.
While awaiting your call on the evening of October
5 I drew up a draft of my own suggestions with respect
to an

to an announcement for giving gold by the United States
under the new arrangement. I mentioned my ideas briefly
to you in our conversation by telephone. On the morning

of October 6 I took the liberty of amplifying and sending
to you my views in oablegram No. 970, dated 9 a.m. In
this, as in all of my messages, I gave you my frank
opinion. I was concerned lest the statement which you
proposed might eventually prove to be too narrow, and I
hoped that you might yield gold to foreign "monetary

authorities."

At 10 o'clock on the morning of October 6, I called

on Minister of Finance Auriol. This was my first visit
with the Minister of Finance since the night of September

25. M. Auriol reiterated at this time his appreciation
of your cooperation in the tripartite move and insisted
that passage of the French monetary (devaluation) law
would have been absolutely impossible if it had not
been accompanied by the three-power agreement. I told
him of witnessing some of the debate in which he defended

his policies, and he reminded me of the bitterness with
which he was attacked by several of the parliamentary
leaders who personally shared his own views in the

premises but felt obliged to criticize on account of
political reasons. M. Auriol expressed his particular
pleasure at the privilege of having direct communication
with you and he hoped that this method could be utilized

in the future. I think I told you previously that I was
convinced that M. Auriol's exchange of felicitations
with you on the night of September 25 was his first
occasion

-5occasion to use the transatlantic telephone. He is
a very direct individual and appreciated the expeditious manner in which we had arranged matters through

direct contact, in contrast with the complications and
delays that would have necessarily been involved if the
more formal procedure of diplomatic correspondence had
been followed.

Incidentally, the Minister mentioned the serious
embarrassment which had been caused him in the early

stage of the conversations through M. Monick's excessive

zeal. M. Auriol let me understand confidentially that
M. Monick's visit to you last June had been inspired by
certain of Monick's friends, and that he, M. Auriol,

was then too new in office to object thereto. It was
understood, however, that Monick should go to the

United States only on a visit of observation, and
should enter into no negotiations. The Minister of
Finance told me that Monick exceeded his instructions
and began sending reports back to France, through the
French Embassy at Washington. These reports were

received by the Minister for Foreign Affairs, and
pertinent parts thereof were sent, according to practice,
to the President of the Republic. M. Auriol knew nothing
of these reports until President Lebrun summoned him to
the Elysee Palace and asked that he explain why he had
sent an emissary to the United States without the
President of the Republic even having knowledge thereof.

M. Auriol seemed convinced of the inadvisability of
usilizing M. Monick's services on any future journeys
to the United States, and I said nothing to encourage a
further

further mission on M. Monick's part.
M. Auriol thought that we had taken a Dig step
forward through the three-power declaration. He was

greatly pleased at the reception given this declaration
by most of the European countries, the principal exception being Germany. He was particularly gratified over

Italy's action. He told me that he had not desired
that Dr. Schacht should figure in the original negotiations principally because he felt that Dr. Sohacht
and Governor Norman were so close that there might have
been some Anglo-German collusion which would have made

agreement difficult. The Minister was anxious to see
what Dr. Schacht would eventually do. He said that he
was sending word to Dr. Schacht, by Governor Labeyrie

of the Bank of France, since the two were to meet at
the B.I.S. that week-end, that whenever Germany might

see fit to follow the procedent set by France, the
latter would be ready to cooperate with Germany toward

achieving stabilization and toward reduction of trade
and exchange barriers. The Minister of Finance said,
however, that he would insist that the financial burden
which the policies of armament actually being followed in
Europe would entail, would prove to be unbearable by the
various Treasuries. That is, no hopeful progress toward
monetary stabilization could be achieved until military
policies might be brought within the paying capacities
of the countries concerned. The Minister said that
while ve had made considerable program, there was much
more

-more to do in the way of consolidating our gains and
looking to future economic and monetary rehebilitation.
He expected to be in contact with Premier Van Zeeland

of Belgium within the near future on plans for cooperation in the premises, and promised to inform me of the
course of their discussions.
In our conversation, M. Auriol brought up the
subject of war debts owed by France to the United

States. He regretted that there was nothing that
France could do at present to clear up this matter.
He said that if his Government remained in power, he
hoped that, after internal order and some degree of

prosperity might be achieved, it would be his pleasure
and opportunity, say in another year or a year and onehalf, to make spontaneously to the United States an offer

of final settlement of the war debt. He said that such
an offer would be arrived at after studying all phases
of the question, including the Hoover Moratorium, the
Lausanne Agreement and the character of the constituent

parts of the indebtedness. I could not possibly conceive
the idea from this conversation that Minister Auriol
anticipated opening the question within the immediate

future, and, although I have made no inquiries in the
premises, I am of the opinion that recent moves with
respect to the war debts, which have attracted much

attention in the French and American press, did not

originate with Minister Auriol.
The purpose of my visit with the Finance Minister
was

-8was to ascertain whether the French would be interested
in making an arrangement and a declaration in regard to
gold of the character which you had suggested to me on
the preceding evening. The Minister of Finance told

me that he desired to consult his assistants and the
appropriate officers of the Bank of Frence on this
subject, and would endeavor to give me an answer

during the course of the day. The above information
was incorporated in my cablegram No. 971 of October 6,
12 noon.

After leaving the Minister of Finance I talked
with M. Baungartner, Director General of the Movement

of Funds Section in the Ministry, and explained to him

the purpose of my visit with M. Auriol. M. Baungartner
promised to call me back as soon as the Minister had
reached a decision. M. Baungartner himself was

confident that they would act in complete accord with
your desires.
You telephoned me at 12:20 noon on October 6. You
told me that the British Embassy in Washington was

pleased with the offer which you had extended them to

participate in the gold declaration, but that you had
not yet had time to receive the reaction from the
British Treasury in London, to which the Embassy had

referred your proposition. I told you of my visit with
the Minister of Finance and let you know that I would
communicate further news as soon as I might obtain the

definite French answer. I mentioned in our conversation
that

that I had in my cablegram No. 970, sent at 9 a.m. that
morning, presumed to present my own views on the matter

of a declaration.
At 1:05 p.m. I talked by telephone with M.
Baungartner, who was happy to tell me that his Minister
of Finance was in complete accord with you on the matter

of a statement in regard to giving gold on a reciprocal
basis. The Minister desired to know, however, what the
British had decided to do. The French officials made
the point that they already were practicing actual
reciprocity with the British.
I telephoned you at 2:30 p.m. to give you the
Minister's answer, as transmitted through M. Baungartner.
In some manner, which I never understood, your assistants,
who were with you when you were speaking, gained the

impression that I had placed too much stress on the

issuance of a declaration. I assured you that there
had been no misunderstanding on this point and no

insistance on my part that the French should make any
declaration whatever. The French had been appreciative

of your offer to participate in a statement and did not
question in the slightest the propriety of such participation. You told me that you were anxious to get
the matter aleared up in a short time and that you
would call mo back as soon as you had the official
British reply. In the meantime, there was nothing
further for me to do here.
In my cablegram No. 972 of October 6, 5 p.m., I

- 10 gave you the market news of the day, which was princi-

pally to the effect that sterling was being offered
heavily against the frene. The new Italian lira was
quoted at exact parity in Faris.
As I was returning from my home to the Embassy

at 2:15 on October 7, you endeavored to reach me by

telephone, but we did not succeed that day in establishing connection. My cablegram No. 975, filed at 4 p.m.
on October 7, gave the news of the day, including the

fact that sterling continued to be offered in large
amounts at the Bank of France, and the report that
the Swiss had resumed contracting gold at London for

delivery the following week, it having become necessary

for the Swiss at one time to cease operations until
their bookkeeping might catch up with their buying.
In my cablogram I quoted at some length a statement

made by Mr. Chamberlain, Chancellor of the British
Exchequer, on the preceding evening, wherein he referred

to the tripartite arrangement.
on October 8 you telephoned me at 4:45 p.m. You

said that a very satisfactory answer had been received
from Mr. Chamberlain, and that you were working on a
reply. You had prepared a proclamation and a communique

for the press. You said you would cable both of these

to me that night. A representative of the British
Emhassy was coming to see you shortly. You said that
you were also sending me a ocpy of Mr. Chamberlain's

message. You made the point that you were obliged to

- 11 make a statement. You thought the British would be
disposed to make a statement and you wanted the French

to feel free to do likewise if they cared to do so
after having seen your statement. This would be

entirely voluntary, however, on the part of the French.
You hoped to issue your statement on Sunday morning,

if possible, to become effective on Monday. It was
agreed that I should arrange to have your messages
decoded as early as possible so that I could show them

to the Minister of Finance and then telephone you back
as soon as I had obtained M. Auriol's reaction thereto.
You incidentally referred to my cablegram of October 6,
in which I had expressed my own opinions, and you
assured me that these were always accepted in the same

spirit in which they were sent, whether or not you might
be able invariably to act favorably thereon.
Later in the day, at 9:45 p.m., you telephoned me
at my home. You stated that there had been despatched

to me a copy of the new statement signed by the President.
You said this was a legal statement drewn up by attorneys.
You added that since Monday was a bank holiday, Columbus

Day, you were giving out your statement at a 4 o'clock
press conference on that day, instead of Sunday as

originally anticipated, and that the new procedure
would go into effect on Tuesday. You let me know that
you were giving the British the name information that
you were giving me and that you had told the British
that, once the statement was issued, they should get into
touch

touch with the Federal Reserve Bank at New York toward

working out details of gold reciprocity. You told me
that in your press conference you would answer any

general questions, but that you would not explain

that the gold price was to be fixed on a daily basis.
You told me that I could leave with Minister Auriol
copies of the messages you were sending me that night,
and it was arranged that I telephone you back at 2:30

p.m. the next day to give you the French reaction.
Before we finished our conversation I let you know that
I had talked with M. Cariguel during the day and he had
asked me if I had received any information from you on
gold reciprocity, since no word had been received from
the Federal Reserve Bank directly, and Undergovernor
Fournier was becoming quite nervous.
On the morning of October 9 the Embassy received

your cablegram No. 391, giving the text of the communication from the Chancellor of the Exchequer, and No.

393, setting forth the gold statement which you intended
to issue on Monday afternoon. The second of these

messages did not arrive until after 9 o'clock, and,
because of errors in transmission, it was no possible
to complete decoding thereof until 11:45. As soon as
I had received the finished copies from the code room,
I proceeded to the Ministry of Finance, where I was
received by MM. Auriol and Baungartner. I surmarined
developments to them and mentioned the idea of your

making a declaration at 4 P.M. on Monday, October 12.

- 13 -

I then went with M. Baungartner to his office; I let
him read the two messages and then left with him

excerpts therefrom, consisting of the text of Mr.
Chamberlain's communication and the text of your
proposed declaration. M. Baumgartner told me that
he would talk with Undergovernor Fournier of the Bank

of France at 1 o'clock that afternoon and would try to
give me an answer between 4 and 5 p.m.

After returning from the Ministry of Finance, I
put in a call for you, at 12:50 noon, and got conneetion at 2 p.m. I reported the developments of the
morning to you. When I mentioned that your proposed

statement had come through in form practically identical

with that originally drafted, you volunteered that you
were working under terrific pressure, which I easily
understood. You said that the first step, the tripartite declaration, had been a great success and that
you had to move cautiously with this second step. You
gave me additional information which you said I could
pass on to the Bank of France.
Consequently, at 3:25 p.m., I telephoned M.
Baungartner, who was then at Governor Fournier's office.

I told him that I had talked with you. I explained
that you desired that the French and British give out
your statement to the press; that they comment thereon;

and that they indicate that they are going to give gold
to the other two parties of the agreement under similar
conditions, that is, that gold moves on all sides of

the triangle; and, finally, that the declaration be
given to the press at 4 o'clock in Washington and 9
o'clock in Paris and London. I let M. Fournier know
that he was free to discuss with the Federal Reserve
Bank of New York the technical details incident to
procuring a working arrangement with the United States

along the lines being consummated with the British, as
set forth in Mr. Chamberlain's memorandum.

At 5 p.m. on October 9, I sont cablegram No. 983,

letting you know that the Paris bourse had turned quite
weak, with a decline in rentes, and that the reflux of
capital to France had slackened, for domestic and

international political reasons.
At 5:45 I telephoned M. Baumgertner and made an

appointment for 7 o'clock that evening. At 7 o'clock
he gave me the British communiqué which the Bank of
England had telephoned through the Bank of France.

The French were willing to give a simultaneous

declaration and were preparing it, their declaration,
and translating the statement of the Secretary of the
Treasury into French, for issuance at 9 o'clock on
Monday night.

At 9:15 p.m., October 9, I spoke with you from
my home. I told you that I had given your message to
MM. Fournier and Baumgartner, and that they had talked

with London and had received the text of the British
communique. You told me that you had not yet received

the British reply directly. You would telephone or
cable

15 -

cable it to me as soon as received. When I told you
that I was planning to leave for Basel on Saturday

night, to be there for the B.I.S. meetings, you told
me that you wanted the text of the English declaration
cleared up before I left. I mentioned in this conversation the sending of a special emissary by Dr. Schacht

to Minister Auriol.
At 10:20 a.m., October 10, I talked by telephone
with M. Baungartner. I told him of my conversation
with you of the preceding evening and mentioned that

you had not yet received the official text from the
British. M. Baumgartner said that he had that morning

received the text officially through his Financial
Attaché in London, and that this was exactly the same
as the text which had been received by telephone through
the Bank of France.
In my cablegram No. 985, sent at 1 p.m., October 10,

I let you know that the French financial press was
continuing to criticize French legislation and regulations
against alleged hoarders and speculators, it being felt
that such measures were tending to prevent the reflux

of French capital. I also reported that I had talked
with M. Cariguel during the morning. He had told me
that he had worked out with the Federal Reserve Bank

at New York a forty-eight hour arrangement on gold.
At 3:15 p.m., October 10, you telephoned me at my

homa. You stated that the British had given to you the
official statement, which was entirely satisfestory.
You

-16You had not checked this against the one which I had

telephoned you the preceding night. I let you know
that I was examining M. Baungartner's French trans-

lations, and it was understood that these translations
were to be sent to you. You approved my departure for

Basel that night, for return to Paris on Tuesday morning,
but you wanted me to make sure that the French were not

to permit any leak before Monday night.

At 7:15 on the night of October 9, I had received
from M. Baumgartner the text, in English, of the
communiqué which the British planned to give to the

press. I had informed you of this in our conversation
by telephone on the night of October 9. At 12:35 noon,
October 10, M. Baumgartner transmitted to me a French

translation of the British communique and also a French
translation of the declaration which you proposed to
make. I checked these translations and called M.
Baumgartner back at 4:30 p.m. at the Ministry of Finance.
He agreed to one or two changes which I suggested and

he promised to maintain absolute accrecy until the
communiqués might be released at 9 o'clock on Monday

evening. He also promised that he would cable to his
Financial Attaché in Washington the text in French of
the communiqués which he was issuing, in order that
these might be communicated directly to you.

Consequently, I left Paris at 10 o'clock Saturday
night, October 10, and spent Sunday and Monday in Basel.

In my cablegram No. 992, filed at 11 a.m. on
October

19 -

October 13, I summarized the information which I

gained on my visit at the B.I.S., where the principal
topic discussed by the Central Bankers over the weekend had been that of the currency changes started by
the three-power agreement. The general opinion was

that while the first purpose of the three-power plan
had fundamentally been to help France devalue, the
agreement had been received with such world-wide
interest and had been followed by such wide repercussions on other monetary systems that the plan had

probably acquired an even greater significance than
originally conceived.
I let you know the manner in which the Swiss and
Dutch Central Banks were conducting their currency

measures. I told you of the British and Italian
opinions. I particularly stressed the unhappiness of
Dr. Schacht over having not been informed, through the

B.I.S. or otherwise, of the plans for the tripartite
arrangement. Finally, I let you know that it was
generally agreed at Basel that the French had been

short-sighted in penalizing hoarded gold and in taxing
alleged profits from speculation. It was thought that
the return flow of capital would be much larger if the
French would not establish penalties. You telephoned
me at 3:25 p.m. on October 13. I summarized my Basel

cablegram above-mentioned. I told you that the
atmosphere here was more optimistic and that the
tripartite gold reciprocity announcement had appeared

as scheduled and had been well received, with the

slight exception of the "day-to-day" character thereof.
You told me that the story had gone over very well in
the United States and that the press had been quite
satisfactory, the best story having appeared in the
NEW YORK HERALD TRIBUNE.

In my cablegram No. 993 of October 13, 5 p.m.,
I made the point that the announcement of the preceding

evening of technical arrangements for reciprocal gold
movements between the French, British and American

stabilization Funds had enabled the French Government

to display evidence that the agreement into which they
had entered was fully equipped with means to make it
effective.
At 4 P.M. on October 14, I depatched my cablegram

No. 1001, in which I reported the day's developments.

I also said that in a talk by telephone with Dr.
Jacobsson I had learned that the resident officers of
the B.I.S., and particularly the German Assistant
Manager, had been quite provoked to learn on the

morning of October 13, following the day of their
Directors' meeting and the departure of the Directors

for their respective capitals, that the three powers
had consummated a further arrangement of intense interest

to Central Bankers. Dr. Jacobsson had told me that M.
Beyen was considering the propriety of cabling the
Federal Reserve Bank of New York to the effect that
the B.I.S. thought the now move was good as far as it
went

- 19 -

went but that the B.I.S. would like to see it go
further. In my cablegram I mentioned that M. Baumgartnor had told me that he considered the Paris press
reception of the new arrangement quite good, but that

there had been some political sniping, with the twentyfour hour feature the most vulnerable point. French
technical writers were generally appreciative of the
fact that this arrangement constituted a big forward
step. I quoted comments by French and British

financial writers.
You telephoned me at 3:15 p.m. on October 15.

You stated that you had two matters to take up with me.

First, my friends in Switzerland had cabled to the
Federal Reserve Bank that they wanted to join the gold

pact. The Federal told them that this matter would
have to be taken up through the Secretary of the
Treasury. You had consulted with the Department of

State, and the latter was glad to approve your use
of me in conducting the necessary negotiations in
Europe. An instruction was to be sent out from the
Department of State to the Paris Embassy the same day

to this effect, but you desired to save a few hours by
telephoning me. The American Minister in Switzerland

was not informed of the above facts, but I was to keep
him advised of any developments. I was not instructed
to consult with him. You stressed the point that you
desired to do business with the Minister of Finance,
that is, that negotiations would be between governments,
rather

- 20 rather than through their Central Banks.
The question had also been raised by Belgium.
Governor Franck of the National Bank of Belgium had
oabled Governor Harrison of the Federal Reserve Bank

of New York as follows: "On reciprocal conditions
your cable we confirm our arrangement to sell gold to

United States our legal parity. Please transmit to
Treasury." You explained that the Federal Reserve
Bank of New York had, at your request, telegraphed
the text of your gold announcement of October 12 to

the Central Banks. As in the Swiss case, the Belgians
had been informed that they had to work through
Treasuries.

You were to advise the British of the above-

indicated interest of the Swiss and Belgian authori-

ties in joining the gold pact. You desired that I
inform Minister Auriol in the same sense. I was to
ask the French Minister of Finance whether he desired

to join with the United States in extending reciprocal
gold privileges to Belgium and Switzerland. I was to
ask whether France already had any arrangements with

these two countries. I was to make it clear that we
were being spontaneously considerate of France and

Great Britain in keeping then informed and in ascer-

taining their interest toward joining in this
extension of the pact.
You explained that Belgium was probably the only

country eligible to draw gold from us under the old
, announcement

announcement of February 1, 1934. You did not want
to cancel this announoement until you had a new
arrangement with Belgium. You did desire, however,
that the arrangement of October 12 should supersede

that of February 1 and that the earlier arrangement
be cancelled. That is, the reciprocal agreements
would be between Treasuries, and Central Banks would

act simply as agents of the Treasuries. It was not
essential that a country have a stabilization fund,
although it was perhaps easier if they did have such
a fund to operate through in cooperation with the funds
of the United States and other countries. The Ambassador
in Brussels was not being instructed as to my trip, but
I was to keep him informed.
You desired that the countries with which we
entered arrangements should be able to keep up their

own end, that is, support their own exchanges. You did
not went to take on any "lame ducks. You stressed
again that you wanted to cancel the 1934 arrangement

as soon as possible and have the October 12 the only
gold arrangement. You said again that the Department
of State was gled to have me act in the above-mentioned

capacity. You used the expression "through diplomatic

channels" two or three times when talking with me, to
the effect that negotiations should be through such
channels and not through the Central Banks. I asked
you if you meant that the negotiations should be through
the usual channels of our Embassies in the respective
ocuntries.

countries. You said no, but through the "MorgenthauCoohran" diplomatic channels. You desired, however,

that I inform Ambassador Bullitt of this arrangement.
When you inquired if I had any questions, I asked

you whether I was to go to Brussels and Born. I thought
it would be better to discuss the matter in person. You
said I was the salesman of the idea and that I should
use my own judgment. Likewise, when I asked you if I
could make the appointments with the Ministers of
Finance through my Central Banking contacts, namely,
Governor Franck of the National Bank of Belgium and
President Bachmann of the Swiss National Bank, you said

you left this entirely to me. I told you that if I
made the trips I would send no cablegrams while absent
from Paris. You asked me to let you know whenever I

left Paris and to get in touch with you upon my
return.

At 6:45 p.m., October 15, I called on M. Baumgart-

nor at the Ministry of Finance. I told him of your
telephone call above-described in regard to the Swiss
and Belgians. M. Baumgartner said that he was sure
that the French would be glad to associate themselves

with this move. He would have to speak with the Minister
of Finance and would telephone me at 10 o'clock the next
morning, October 16.

My cablegram No. 1008 of October 15, 5 p.m.,

described the exchange situation and quoted from the
Jandon TIMES a report of Mr. Eden's speech, in which he
had

- 23 -

had referred very nicely to the tripartite arrangement
and its consequences.
As agreed, M. Baumgartner telephoned me at 10

o'clock on the morning of October 16, but said that
the Minister of Finance had been ill and would be

late getting to the Ministry. M. Baungartner subsequently informed me that the Minister was quite in
accord with the arrangement for bringing the Belgians
and the Swiss into our group. At 10:45 on the morning
of October 16, I telephoned Governor Franck of the
National Bank of Belgium at Brussels and made an

appointment with him for 10 o'clock the next morning.
It was arranged that he would receive me at the Bank

and would fix an hour for the Minister of Finance or
the latter's competent representative to meet with us.

I left this in Governor Franck's hands, simply explaining that I must be in touch with the Ministry of Finance.
I also telephoned to President Bachmenn of the Swiss
National Bank at Zurich at 11 a.m. and made an appointment to meet him on October 19 at 9:30, at the head

office of his Bank in Bern. He was furthermore to
arrange an appointment for us with the Swiss Minister

of Finance for 11 a.d. October 19. I urged upon
President Bachmann the necessity for completing our

business on the one day, so that I could return to
Paris on Monday night.
On October 16 I had received the Department's

cablegram No. 405 of October 15, 12 noon, authorizing

24 -

me to establish contacts with the Swiss and Belgian

financial authorities and to negotiate with them in
your behalf. Your message No. 406 of October 15,
5 p.m. gave the texts of the messages which had been
received by the Federal Reserve Bank at New York from
the Swiss National Bank and the Governor of the National
Bank of Belgium.

In my message No. 1010 of 4 p.m., October 16, I

let you know that I was proceeding to Brussels that
night and to Bern on Sunday evening, and that Ambassa-

dor Bullitt had telephoned Ambassador Morris at

Brussels and Minister Wilson at Bern, informing them
of my plans.
Your cablegram No. 409 of October 16, 5 p.m.,

and your No. 410 of October 16, 6 p.m., giving the
texts of the Federal Reserve Bank's replies to the
National Bank of Belgium and the Swiss National Bank,

respectively, were not received in Paris until early
on the morning of October 17. I had arranged, however,
with an Embassy oode clerk to be on duty quite early
that morning. The two messages were, therefore,
decoded and telephoned to me at my hotel in Brussels

before I went to the National Bank of Belgium to keep
my 10 o'clock appointment.
At 9:30 on Saturday morning I called on Ambassador

Morris and explained my trip to Belgium. The Ambassador

suggested that before leaving Brussels I call on the
Prime Minister, M. Van Zeeland, whom I have known for
some

- 25 some years.

After receiving in Peris your instructions to
visit Belgium and Switzerland for the purpose of
carrying on the negotiations under reference, I spent
some time going over all documents available to me in
regard to effective monetary legislation of those

countries. Your instructions as to the form in which
some arrangement should be reached with the monetary

authorities of the two countries were quite general.
I worked out the idea that perhaps the best arrangement
would be for the competent authorities to make a

declaration wherein they made clear the existing laws
affecting domestic and international gold dealings by
them, and indicated their competency and willingness
to effect gold dealings on a reciprocal basis with
your Treasury. Such a declaration should facilitate

your study of the eligibility of each country, since
this declaration would summarize pertinent legislation,

would indicate what type, if any, oz stabilization or
equalization fund was in existence, and its method of
operation.

With the above plan in mind, I called on Governor
Franck of the Bank of Belgium at 10 o'clock on October
17. He had with him M. Joseph Warland, the General
Manager of the Belgian Treasury and Public Debt, and
My. Adolphe Baudewyns, Secretary of the National Bank

of Belgium. I referred to the exchange of cablegrams
between the National Bank of Belgium and the Federal
Reserve Bank of New York, and I indicated my purpose
in coming

coming to Brussels. I had with me documents to

assist in explaining the American position and in
suggesting the lines along which the Belgian authori-

ties might clarify and set forth the Belgian position
with respect to gold transactions. A declaration was
then drafted in French.
After completion of the draft, MM. Franck, Warland
and I went to the Ministry of Finance, where the

Minister, M. Henri de Man, received us. He read,
approved and signed the declaration as drafted, after
Governor Franck and I had explained to him the purpose

thereof. Governor Franck signed the declaration, after
the Minister had signed, and the Minister of Finance
then handed the document to me. M. de Man was then
kind enough to telephone Prime Minister Van Zeeland,

with whom he arranged a twelve o'clock interview for
us. Governor Franck and I explained to the Prime

Minister the purpose of our visit, and he read the
declaration carefully. He found it quite satisfactory,
but he made the point that, relative to the second
paragraph of the first article of the declaration,
Belgium had had no provision of law which restricted
gold dealings to countries of the gold block and the
United States. After leaving the Prime Minister, I
returned with Governor Franck to the National Bank of
Belgium, where I translated the document from French
into English and had it checked by Secretary Baudewyns.
I lunched with Ambasandor Morris and showed him
the

- 27 the declaration.
I returned to Paris on the evening of October 17.
On the following morning I filed at 10 a.m. my cablegram
No. 1018, providing you with the English translation of

to add on to our tripartite arrangement more than the
three countries of Belgium, Switzerland and the
Netherlands. Governor Franck thought we should stop

with these three and then work through the B.I.S. in
our gold dealings with any other countries. Governor
Franck had emphasized to me that he had plenty of gold

and was entirely willing to lose some of it. He said
he had already been giving gold to France, following
devaluation of the French franc.
You telephoned me at my home at 1:20 p.m. on

Sunday, October 18. I summarized to you the account

of my Belgian trip as set forth in my cablegram No.
1018 above-mentioned. I told you of my plans for the
Swiss trip. You seemed to approve of the idea of a
general declaration such as I told you I had obtained
from Belgium, leaving technical details to be worked
out

- 28 out directly with the Federal Reserve Bank of New York
after the preliminary agreements had been reached. In
this conversation I mentioned to you a news item from
the Netherlands in regard to possible adherence of the

Netherlands to the tripartite agreement. I suggested
that I might possibly telephone Governor Trip of the
Bank of the Netherlands if we got switzerland lined
up, to give him at least the opportunity of bringing
the Netherlands into the arrangement before we made

any announcement of these two countries. You told me

to hold this question in abeyance until after I had
returned from Switzerland and had telephoned you my

report. You said that you wanted to be careful in
having the State Department approve every one of my

until we might get both the Swiss and the Dutch into the
arrangement. You told me that the British would come in
with us entirely on these arrangements and were quite

willing for us "to write the ticket."
On the night of Sunday, October 18, I left Paris
for Switzerland. Upon my arrival next morning I went
to my hotel and immediately called upon Minister Wilson,

who lives in the hotel, to explain the purpose of my
visit. At 9:30 I was received at the Swiss National
Bank

Bank by President Bachmann. When I came in the door,

he asked me, "Where is Mr. Morgenthau? I told him
that you were in Washington insofar as I knew. When
I had called Professor Bachmann by telephone at

Zurich to tell him that you wanted me to visit
Switzerland with the purpose of conferring with the
Minister of Finance, he simply misunderstood me to
say that you were coming. with President Bachmann
were MM. schnyder and Weber, who are Vice President

and Third Member, respectively, of the Board of General
Managers of the Swiss National Bank, President Bechmann

being the first ranking member.
I proceeded with the Swiss along the same lines I

had followed with the Belgians. That is, I referred
to
New

resources as an
the

such resources the

Swiss to

management availability declaration exchange Federal American the authorities exchange Reserve equalization position; of to of set Bank of and forth telegrams grant of fund, suggested the that reciprocity the York; and Swiss between could responsibility the the explained devaluation, willingness be lines them to utilized the and of the United a the for the of

States in gold deelings. Professor Bachmann raised

several technical points which he had set forth in his
cablegram of October 14 to the Federal Reserve Bank of

New York, He also wented the inclusion in this statement

of a provision for immunity of gold holdings. I told
him that technical points would have to be cleared up
with the

with the Federal Reserve at a later period and that
it would be preferable to omit any request for
immunity. I reminded him that when an embargo had

been placed upon gold exports from the United States,

holdings of Central Banks had in fact been exempt. I
did not think it possible, however, for any pledge to
be given by us, in acknowledgment of the Swiss declar-

Federal Council, received us. We explained the idea

of gold reciprocity, and Dr. Meyer indicated his entire
approval of and sympathy with the plan for SwissAmerican cooperation. He explained that under Swiss

practice, it would be necessary, however, for him to
obtain from his colleagues on the Swiss Federal Council

approval of the proposed declaration before he could

sign it.
President Bachmann and I then returned to the
Bank, where a draft declaration was drawn up. My
Swiss friends were most thorough and pains-taking in

checked. The above tasks occupied our entire afternoon.
Just before dinner I called on Minister Wilson and

showed him the declaration. I left Bern that night
and reached Paris the next morning. My cablegram No.

1021, filed at 11 a.m. on October 20, reported my
negotiations and contained the English translation of

the Swiss declaration. In this message I explained
to you that I had cautioned the Swiss to guard the
negotiations as confidential, as I had the Belgians,
The Swiss, in turn, requested that the contents of
their declaration be kept confidential and be not
published. Furthermore, I let you know that several
days would have to elapse before the definite approval
of the Federal Council could be obtained.
At 4:30 p.m., October 20, I reached you by telephone
ant summarized to you my eablegram No. 1021, reporting

You said that you were considering the idea of limiting
operations by countries having no stabilization funds,
such as Belgium, to a quota, say 10 million dollars
for any one day, lest some other countries might operate
through the country in question. You asked my idea on

this. My initial reaction was that such a restriction
should not be imposed, it being my feeling that we could
afford to be generous rather than otherwise in yielding
gold.

gold.

In my sablegram No. 1028, dated October 21, 6 p.m.,

I let you know that I had called on M. Baumgartner at
the Ministry of Finance, at 5 o'clock, and had
acquainted him with the results of my trips to Belgium
and Switzerland. I learned that the French were
entirely ready to move along with us in making
reciprocal arrangements with the Belgians and the
Swiss in regard to gold transactions. M. Baumgartner
asked that the French be given time to complete technical arrangements with such countries as the United
States might consummate arrangements with before we

issued any public announcements in regard thereto. The
French would desire to make simultaneous announcements.

M. Baumgartner hoped that the Netherlands would join in

the arrangement in order that a complete picture of
cooperation and solidarity between the six important
financial nations might be achieved.
On the morning of October 22, I received your
cablegram No. 421 of October 21, 5 p.m., reising a
question in regard to a spread in the Swiss buying and

selling prices of gold, as set forth in the Swiss declaration which I had cabled you. In my message No. 1034,
dated October 22, 2 p.m., I gave you my explanation on

this point. In this same telegram, I told you of a
letter, dated the 21st, which I had received from
President Bachmann, who said that the Swiss Federal

Council would pass on the question of the Swiss

declaration on October 23, and that the Board of General
Managers

25 Managers of the Swiss National Bank would then have

to submit the question for approval to their Board of
Delegates on October 27.

The Paris exchange market was quite hectic on

October 22 with the frane heavily under pressure, due

to domestic political concern over the Radical Socialist
convention at Biarritz and to international apprehensions
lest the Little Entente States follow Belgium's example
and declare their neutrality. In my message No. 1035
of 5 p.m., I gave you a summary of the day's operations,
including remarks of M. Cariguel thereon.
On the morning of October 23, I received your
cablegram No. 423 of October 22, 6 p.m., asking me to

to acquaint him with the delay that was taking place
in Switzerland, due to the necessity of procuring such
complete official approval of the declaration. M.
Baungartner again asked if we had heard from the Dutch.

He said that it was possible that President Trip of the
Netherlands Bank might be visiting Paris the next week.
Incidentally, this visit never transpired.
You telephoned me at 4:15 p.m. on Monday, October
26.

34 -

26. You stated that you were satisfied with the
declaration which I had received from the Swiss on
my trip to Bern, and with the arrangement contemplated

therein. You were not satisfied, however, insofar as
Belgium was concerned. The declaration which I had

obtained from the Belgians did not let you feel that
you were doing business with the Treasury. You said
that the Treasury could designate the National Bank of

If Belgium did not see fit to come in on our terms we
should go ahead with our arrangements with Switzerland.
When I mentioned that no word had yet been received

from the Rotherlands, you said that you had no objection

that I had visited their two countries, and that I was
going to Brussels again on Tuesday evening.
At

- 35 At 4:30 on October 27, M. Baumgartner telephoned
me that M. Fournier had telephoned the Netherlands

Bank at Amsterdam but had learned that President Trip
was absent from the city. Undergovernor Fournier had

agreed to call President Trip when the latter might
be back in Amsterdam, and M. Baumgartner promised to

let me know the results of the conversation when I
returned from Brussels.
In my cablegram No. 1053 of October 27, 5 p.m.,

I continued my observations of the preceding few days

upon the factors which were working against benefits of
devaluation of the French franc. In a later cablegram,

No. 1054, dated 6 p.m., I reported that, in compliance
with instructions received from you by telephone, I
was leaving for Brussels that night and should be back
in Paris on Wednesday night. In accordance with the
above plans, I left Paris on the evening of Tuesday,
October 27. When you had talked by telephone with me

on the afternoon of October 26, you had asked that I

go up to Brussels that same evening. I told you that
it was too late for me to telephone to Brussels for
appointments and to catch the train which left Paris
at 6:10 p.m. I did proceed, however, to telephone
Governor Franck at once on Monday evening and made
an appointment for Wednesday morning.

No further instructions from you as to the specific
representations which I should make at Brussels arrived

for MO before I left Paris or were transmitted to me
at Brussels before the hour of my appointment with the
National

- 36 -

National Bank of Belgium. I was, accordingly, free
to use my own judgment in endeavoring to obtain the
ends which I thought you desired. When I was received
by Governor Franck and Secretary Baudewyns of the

Belgian National Bank, I indicated to them your wishes.
Governor Franck again went over the Belgian situation

with me. I was definitely informed that the Belgians
had no intention of reestablishing a stabilization
fund. Realizing, therefore, that there WAS no likelihood of a change in the basic Belgian monetary set-up,

placed in the position, before the Belgian public, of
seeking to contravene the laws and practices which fix
the relations between the Government and the Central

Bank. Governor Franck and I drew up a letter with
the above points in mind. We telephoned the draft
text to Minister of Finance de Men, who assented to
the terms, but requested that I learn from you whether
the draft would meet your requirements before he be
asked to sign the document.
I went to our Embassy in Brussels, where I

explained the situation fully to Ambassador Morris

and put in a call to talk with you at 2:30 p.m. I
then

- 37 then went back to the National Bank of Belgium, where
I attended a large monthly luncheon of the Directors
of the Bank, at which a number of prominent outside

officials were present.

After the luncheon I returned to the Embassy and

spoke with you. I read you the text, in English, of
the letter which had been drafted. You could not give
an immediate answer as to whether this would acceptably

solve the question. You asked me to oable the text,
together with my comments, Consequently, the draft
was not submitted to the Minister of Finance for
signature at a 4 o'clock appointment which had been
arranged for this purpose.

Before taking the 4 o'clock train from Brussels
to Paris, I again spoke with Covernor Franck, and it
was understood that I should communicate further with

Brussels if you desired that the letter be completed.
It was agreeable to the Belgians that this letter be
addressed to you and be sent to me for transmission

to you. It will be recalled that I raised this point
with you on the telephone, since the Belgians were
uncertain as to whether the letter should be transmitted

in this fashion, or through our Embassy in Brussels, or
be simply a note addressed to me. I told Ambassador
Morris of all of my conversations, and he was entirely
agreeable to the idea of the letter being sent to you,

through me, if it might subsequently be signed. In our
conversation by telephone, you stressed the point that
any actual arrangements which you made with foreign
countries

38 -

countries in regard to reciprocal gold dealings would

have to be made public.

Upon my arrival in Paris on the evening of October
28, I came to the Embassy and despatched at 10 p.m.
my cablegram No. 1061, which I had prepared on the

be of a governmental character. You will recall that
on my first visit to Brussels I had procured the
signature of the Minister of Finance to the declaration,
along with that of the Governor of the Central Bank,
and had also obtained the oral approval of the Prime

actually the property of the National Bank of Belgium,
the latter would not, in my opinion, be acting as

fiscal agent of the Treasury in such transactions. My
whole purpose had been to achieve ar understanding as

completely in accord with your desires as possible,
but at the same time to make known to you attendant

facts and circumstances, and to take every precaution

to prevent any eventual oriticism of our arrangement.

39 -

At 3:15 p.m. on October 29, I telephoned President
Bachmann at Zurich to learn what progress was being

made with the Swiss declaration. He told me that he
had mailed to me a letter, accompanied by copies of
a text of the Swiss declaration which had been approved

by the Board of Delegates of his Bank at a meeting held
on October 28, and was to be passed upon by the Swiss
Federal Council on October 30. He mentioned to me a
few changes which had been made in the text as

originally drafted when I visited Bern.
You telephoned me at 5 p.m. on October 29. I gave
you the substance of my conversation with President

Bachmenn. We discussed the results of my Belgian trip.
You and Dr. Feis asked me for precise information as

to the position of the Belgians with respect to
publicity of any arrangements which they made with us.

You referred to the need of letting your public know
what you were doing, particularly since you faced the
necessity of having legislation passed to give

approval, for arranging gold reciprocity.
I mentioned to you that President Trip of the
Netherlands Bank had telephoned me on the preceding

afternoon from Amsterdam indicating the interest of

Premier Colijn and himself in inquiring in regard to
the formalities with respect to entering a reciprocal
gold

40 -

gold arrangement with the United States. You told

me that you preferred that I see President Trip in
Amsterdam, rather than reserve our interview for our
next meeting at Basel on November 9. You stated,

however, that your hands were full for the present,
and that you would give me specific instructions
later.
In my eablegram No. 1063 of October 30, 12 noon,

I confirmed my report or my conversation with President

Trip. I also let you know that at 10:45 on the morning
of October 30, M. Baumgartner had telephoned to inquire

about the present status of our negotiations. M.
Baungartner strongly advanced the opinion that no
announcement should be made with respect to Switzerland

or Belgium until we might see whether the Netherlands

me at 3:30 on the afternoon of October 29, he said that

he had not gotten into touch with us earlier, not
because he had not wanted to cooperate fully but that
he had desired to see how conditions might develop on

the matter to you and received your instructions.

Basel. He seid that he was already working on a
formula for transactions with the Federal Reserve Bank
at New York, which he would mail to me. He had confirmed
that Premier Colijn would be glad to receive me whenever

I might visit the Netherlands. He mentioned that
Governor Labeyrie had telephoned him the preceding

afternoon, shortly after he, President Trip, had apoken
with me in regard to possible arrangements with the
United States. He made the point very clearly that
he had thus taken the matter up with us on his own

initiative and prior to his receiving any suggestion
from the French.

In my cablegram No. 1064, dated October 30, 3 p.m.,
I gave you the amendments which had been made in the

Swiss declaration, I having received on that morning
the letter from President Bachmenn, dated October 29,

1936, which set forth the new text. I also told you
that I had received at noon on October 30 a telegram,
in which President Bachmann informed me that the Federal
Council had authorized the Swiss Finance Department to

sign the declaration as of October 28,
You

You telephoned me at my home at 2 p.m. on

Sunday, November 1. I let you know the developments

of the week-end, including the receipt of a letter
from President Bachmann confirming his telephone call
and telegram, and informing me that the signed Swiss

declaration should reach me shortly. I told you
furthermore, that M. Bachmann had raised the question

as to whether Switzerland should adhere to the tripartite declaration of September 25 in the same manner
that the Belgian Government had adhered.

You told me that you desired that I proceed to
the Netherlands on Monday with the view to procuring

from the Dutch an arrangement along the lines of the
declarations I had obtained from the Belgians and the
Swiss. You said that you would ask the Department of
State to send me the necessary instructions that day
(the Department's instruction No. 441, dated November

British and French Treasuries in the event that
additions might be made to the countries eligible
to reciprocal gold transactions. In my cablegram
No. 1070, dated November 2, 10 a.m., I confirmed
my understanding of certain points which we discussed

by telephone the preceding afternoon. I included in
this cablegram certain reasons which, in my opinion,
made it

made it important to extend the tripartite agreement

as early as possible. I also told you that I had
telephoned President Trip, who would receive me at

the Bank of the Netherlands the following morning
and would make an appointment with Premier Colijn.

I was, therefore, leaving Paris on Monday noon for
Amsterdan and should be back in Paris on Wednesday
morning.

On the morning of Tuesday, November 3, I called

at the Bank of the Netherlands at 9:45 a.m., and was

which he had drawn up suggesting the lines along which
gold transactions might be carried out between his
Bank and the Federal Reserve Bank. I had studied these
on my way to Amsterdam with the view to having in mind

a draft declaration which would be similar to those
declarations already obtained from the Belgians and
the Swiss, and would at the same time include enough

of Dr. Trip's suggestions to satisfy the Dutch. with
Dr. Trip's memorandum and the Swiss and Belgian

declarations before us, the drafting of a Dutch
declaration proceeded quickly, particularly due to the
fact that this could be drawn up in English. The work,
except for typing and final revision, was finished
before MM. Trip and Beaufort and I went out for lunch.
Immediately

Immediately afterwards we read over the typed copy
and made e few corrections therein.

At 2:45 President Trip and I took the train to
The Hague, where Fremier Colijn, with Minister of
Finance Oud present in his office, received us at
4 p.m. I explained to MM. Colijn and Oud the procedure which we were following in our negotiations
with the countries which had indicated an interest
in having gold dealings with us on a reciprocal basis,
and President Trip explained to them the draft document.
MM. Colijn and Oud approved the document, but it was

agreed it should not be signed until I might ascertain
from you the acceptability of the terms thereof. It
was understood that MM. Oud and Trip would be the

officials to sign. After leaving the Prime Minister,
Dr. Trip went with me to call upon Minister Emmet,

who is a good friend of his, but we found him out of
town. We hurried on, therefore, to the railway station,
where I caught the train for Paris.
In my cablegram No. 1075, sent from Paris at 10
a.m. on November 4, I gave you the text of the Dutch

of the lack of prospect for a strong, confidenceinspiring Government to come into power. I added that
President

45 -

President Trip felt that the American legislation
providing for a Stabilization Fund and a further out
in the dollar had an important merit internationally
in that this legislation constitutes a balance to
steady sterling, with the relationship between the
dollar and sterling now more than ever having an
important influence on the currencies of the world.
In a second telegram, No. 1076, sent a 1 p.m.
on November 4, I told you of the receipt of the Swiss
declaration, dated October 28, bearing the signatures
of MM. Meyer, Bachmann and Weber. I also let you

know that there had been a leak to the press from

Switzerland as to the Swiss signing a declaration in
regard to the Anglo-Franco-American monetary arrange-

ment. I also mentioned that M. Baungartner had
telephoned me as to the French unahppiness over this
leak, which apparently came from the Swiss Federel

Council. I told M. Baumgartner at this time of the
results of my Dutch trip, and he said Minister Auriol
was anxiously awaiting our decision on the three
countries.
I spoke with you at 8:30 p.m. on November 4. I
told you the substance of my two cablegrams sent during
the day, above-summerized, and urged the importance of

terminating arrangements for the addition of the three
countries by Sunday or Monday. I was anxious that this
might be achieved before the Central Bank Governors met

at Basel. You stated that you were anxious to accomplish
the addition

48 -

the addition of the three countries, on a three-sided
arrangement with France and Great Britain, but you

were afraid this could not be arranged in such a short

time.

In my cablegram No. 1080, dated November 5, 4 p.m.,

I reported the gratification expressed by the European
financial press over President Roosevelt's reelection
and its consequent optimism over the prospect of
continuing monetary cooperation, following up the

tripartite agreement. I also let you know that I
had been able to inform Minister Emmet fully of my

you quoted the draft of a proposed statement to cover

the release of gold for export, not only to the countries
then under discussion, the Netherlands, Switzerland and
Belgium, but also to France and England. In my cablegram No. 1088, dated November 6, 5 p.m., I reported

that, in accordance with your telegraphic instructions,
I had loft with M. Baungartner at the Ministry of
Finance a copy of the proposed statement, and that M.

Baungartner had promised to discuss the matter with
Minister Auriol and to provide me the following day,
if possible, with a memorandum setting forth such
comment as the French Ministry of Finance might care

to give me upon the draft declaration.
When

- 47

When I left the above-mentioned document with
M. Baumgartner at 3:30 p.m. on November 6, he could

not grasp the exact purpose thereof. He thought a
now declaration, especially superseding the one of
October 13, if issued now, would only confuse people.

He thought it better to hurry up with the addition of
the three countries to the original declaration. If
necessary, we could make some amendment later. M.

Baumgartner was quite willing to accept for the
Ministry of Finance the declarations which I had

obtained from the three countries, he stating that
France would require nothing further as a basis for
granting reciprocal gold treatment to the countries
involved. M. Baungartner admitted that, as far as
France's present status was concerned, this new

promised to discuss the matter with Minister Auriol
and to call me back on Saturday morning, when he would
endeavor to give me a memorandum on the subject.

At noon on November 7, I visited M. Baungartner.

He had not been able to see the Minister of Finance
since my call on the preceding afternoon, due to
M. Auriol's being engaged on parliamentary matters.
M. Baungartner had, however, drawn up an informal

letter

- 48 letter, addressed to me, in which he expressed his

personal views. I had asked that the views of the
French officials be set down in writing in order

that there would be no possibility of the slightest
misunderstanding in the premises. I asked M. Baumgartner whether he had any objection to my cabling

his views to you. He said that he had none, provided
that I characterized them as his own views.
In my cablegram No. 1092, sent at 2 p.m. on
November 7, I provided you with a translation of M.

Beungartner's letter, giving three reasons why he
thought your proposed declaration might cause inoonveniences. First, because the impression might be
gained that the October statement was being reversed
for some reason that might not be clear to the French
public; second, because he thought that Belgium could

not subscribe to the declaration as drafted; and, third,
because difficulty or embarrassment might be experienced

if France eventually returned to the normal system of
the gold standard.
On the night of Saturday, November 7, I left for
Basel, where the B.I.S. Directors were having their
monthly meetings on Sunday the eighth and Monday the

ninth. While at Basel I gave an oral reply to
President Bachmann of the Swiss National Bank, who

had written me under date of November 5 to inquire

whether or not his Bank was at liberty to approach the
Federal Reserve Bank of New Yerk in regard to making
arrangements

- 49 arrangements as to future gold and exchange operations.

Since the declaration which I had received in your
behalf from the Swiss authorities had not yet been
definitely approved by you, my answer to President
Bachmann was necessarily negative.

Upon my return from Basel on the morning of
November 10, I filed my cablegram No. 1096 at 10

o'clock, reporting the results of my week-end at

B.I.S. headquarters. I mentioned to you the inquiries
on the part of resident B.I.S. officers as to whether
there might soon be any likelihood of the United States
Treasury releasing gold to the B.I.S. in order that the

latter might have proper facilities for continuing to
help the smaller European Central Banks to rebuild

their gold supplies. I gave you the views as expressed
by Governor Norman upon the gold movement to the United

States, which had been continuing after the consummation

of the tripartite monetary agreement. The Governor
insisted that the Bank of England had all the gold

that it needed or could use. I mentioned the skepticism
of some of my friends in regard to the French making

devaluation a success. In a second telegram, No. 1098,
sent at 5 p.m. on November 10, I informed you of the
nervous condition of the French exchange market and

reported that there was even same gossip as to the

possibility of exchange control.
After returning from Basel I had telephoned M.

Baungartner at the Ministry of Finance to see if he
could

- 50 could give me the views of the Minister of Finance
upon your draft declaration, which M. Baungartner
had thought would be possible on that date, as indicated
in the final sentence of my No. 1092, November 7, 2 p.m.
M. Baumgartner told me that Minister Auriol shared

his views on the statements, but that the matter was

so complicated that they desired to study it further.
I talked with M. Baungartner later in the day, at
5:45 D.M., and he then said that they must aweit a
document from London, which they expected on Thursday

morning. He asked me to cell him at 12:15 on that day.
He said that he had learned that the British were

apparently disposed to interpret your intended statement in a manner different from the interpretation
which he and the French Minister of Finance had placed

upon it. I told you of my call and the postponement
of a decision until Thursday, November 12, in my
cablegram No. 1100, November 10, 7 p.m.

At noon on November 10, Miss Willis, Secretary of
the American Embassy at Brussels, telephoned me that
the Rebassy had received an envelope from the Belgian

Minister of Finance for mo, and she inquired as to

what should be done with it. I told her to forward
it at once in a plain envelope, registered and sealed.
She did not know the contents of the letter. on the
morning of November 12 I received the envelope in

question, and in the inner cover, addressed to me, I
found an original letter, dated November 9, 1936,
signed

I had had no further conversation with any one upon this
subject, and when I talked on a subsequent occasion with

the Embassy at Brussels, I found that no one there had
been in communication with the Belgian authorities upon

this subject. The letter, presumably, was signed and
despatched by the Minister of Finance upon his own

initiative.
I called on M. Baungartner at the Ministry of
Finance at 12:15 on November 12. He told me that he

had received from his Acting Financial Attaché in

London, M. F. Le Norey, a letter to the effect that
London had interpreted your proposed declaration

letter, which I had received just before going to the
French

- 52 -

French Ministry. He admitted that this evidently
indicated that Belgium would be disposed, confiden-

tially, to give a wide interpretation to the manner
in which the Bank of Belgium acted as "fiscal agent

of the Ministry of Finance," even though it actually
was not fiscal agent but "principal" in gold dealings.
He thought France might now yield, seeing that Belgium

was taken care of, but he insisted that his technical
objections, as he had communicated them to me and as

I had cabled them to you, were still well founded.
He told me that Minister Auriol was "confused" over
this new scheme. M. Baumgartner said that he would

the British had given you their reaction to your
proposed statement, since the letter from M. Le Norey
was accompanied by a proposed draft of a British

declaration, dated November 9, to be issued in
welcoming the extension by the United States Treasury

of the reciprocal gold arrangements to Belgium,
Switzerland and possibly the Netherlands. Although
M. Baungartner promised to call me back later in the
day, I did not hear from him; and when I telephoned

the Ministry of Finance at 6:45 p.m., I found that he
had left.
At 10 a.m. on November 13 I telephoned M.
Baungartner

- 53 Baungartner that I was anxious to wire to you on that
day the French response to your proposed declaration.

He said that he would see the Minister during the
morning and asked me to call at 12:15. At the
prescribed hour, I called upon him and then returned

to the Embassy, where I dictated a report of our
conversation and had it coded under serial No. 1106,

dated 4 p.m. At 4:15, I put in a long-distance call
for you in order that you might know the French decision.
At 4:55 I was informed that you were absent until the

following week but that if the matter was very urgent
you could be found. M. Baumgartner telephoned me at

proposal be sent to reach Washington not later than
Saturday morning, was received after my cable No. 1106
of 4 p.m. had been despatched.

In my oablegram under reference, I told you that
while Minister Auriol endorsed the views of his

technical assistant, M. Baumgartner, as set forth in
my No. 1092 of November 7, 2 p.m., I had procured the

oral agreement of the French Minister of Finance to
your proposed statement, as quoted in your No. 445,

November 5, 5 p.m., with one condition. MM. Auriol

and Baumgartner, after learning of the Belgian letter
and of

- 54 -

issued, there should be some wording to indicate that

there had been no rupture of the original tripartite
agreement. That is, they desired that the point be
made that the three powers had not revised their

original agreement, but that certain additional
countries had now been found eligible to be added

to the three original parties for reciprocal gold
dealings. In my cablegram reporting the French

decision, I quoted a letter from the British Treasury
to the French Financial Attache at London in regard to
the proposed communiqué by the Chancellor of the
Exchequer.

You telephoned me at my home at 9 o'clock on the

evening of November 13. You referred to the letter
which I had received for you from the Minister of
Finance of Belgium, and you requested that I mail
this at once to you. I told you of my cablegram

once mail to the three prospective members, Belgium,

Switzerland and the Netherlands, the text of the
proposed

- 55 proposed statement and give them a week to agree thereto.

I thought it might be necessary to visit the countries
personally when the time came. I suggested that you
provide me, for further transmission, with the text
of any oral statements which you planned to make at

the time your formal declaration was issued. You told
me that you were seeking on Sunday the President's

approval to your proposed statement and that I should

hear from you on Monday. You were particularly interested to know what had moved the French to consent to

sure to see him. In two telegrams sent on November 14
I mentioned the press rumors that the Netherlands was

considering joining the tripartite gold arrangement
and that Swiss adherence thereto was considered

practically an accomplished fact. I mentioned these
rumors as reason for haste in our concluding arrangements with the three countries under consideration and

in issuing appropriate announgements. I told you that
strengthening of the tripartite agreement would be
most welcome to France, considering the bitter parliamentary fight which the Government was having on its

budgetary and financial policies.
In my

- 56 In my eablegram No. 1119, sent at 6 p.m. on
November 16, I mentioned the attention which the

prepared a new declaration, which you were cabling me

that night, which was intended to supplement, and not
to denounce, the statement of October 13, and that you
were anxious to get complete adherence to this new

declaration in order that it might be announced by
you at 4 p.m. on Monday, November 23. That is, one

week from the date on which you spoke to me. It was
understood that I was to take no action on the declaration which you were cabling me until you might telephone

or wire me further to the effect that the President,
whom you were seeing the next day, hed given his

definite approval thereto.
On the morning of November 17, I received your
rush cablegram No. 462, sent at 12 midnight, November

16, wherein the draft declaration was incorporated.
You telephoned me at 3:40 p.m. on November 17.

You told me that the President had approved your draft
statement as embodied in the cablegram which you had

sent to me the preceding night. I told you that
Minister Auriol was out of town, but that I was seeing
M. Baungartner at 4:15, and that the latter would
telephone to Toulouse in an effort to obtain M. Auriol's
approval

- 57 -

approval to your new declaration. I was sure that
I could procure the French adherence to your new plan,

especially since it embodied the idea of not cancelling

the declaration of October 13. I agreed that this
statement constituted an improvement over the preceding

draft.
You outlined to me the schedule which you desired

to be followed. You said that you would like to have
the Swiss and the Dutch get out a release on Sunday

night, November 22, for publication in their morning
papers of November 23, indicating the adherence of

those Governments to the tripartite agreement of
September 25. These declarations of adherence should

be phrased similarly to that which Belgium had made
on September 26, and should be transmitted through

the respective Foreign offices to the three powers.
The Department of State should receive such telegrama

not later than Sunday, so that the statements could
appear in American papers on Monday morning. In

answer to your inquiry as to whether I had a copy of

the Belgian declaration, I told you that I had a press
copy thereof, and that I would get an official copy of
the complete statement from the French Ministry of

Finance for the guidance, if necessary, of Switzerland
and the Netherlands.

You stated that the United States, France and

Great Britain would, according to your schedule, give
out on the night of Monday, November 23, releases for
publication

- 58 publication on the morning of Tuesday, November 24.

Your statement in regard to your new policy would be

issued at that time. I asked 1f you desired that you
receive, prior to their issuance, the texts of the
statements which the European countries were going to

give out. You thought this was not necessary with
respect to the statements of adherence to the September
25 agreement on the part of Switzerland and the

Netherlands, since they were simply to follow the

Belgian text, but you did desire, if at all possible,
to have any advance copies of the announcements which

the countries planned to make with respect to the
reciprocal gold arrangements which were being consummated.

It was agreed that I should cable you on the
evening of November 17 the results of the interview
which I was to have at that time with the French

Ministry of Finance. It was not necessary to telephone.
As soon as you received a reply from the British, you
would telephone me, and I could then begin to effect
the necessary arrangements with the three prospective

Governments. I told you that I thought it might be
necessary to visit the officials in the three countries,
particularly the Belgiana, who were most vitelly conearned with the new declaration, and the Dutch, who

had not yet signed their original technical declaration.
Furthermore, it would be quite difficult to make the
Swies understand over the telephone just what was
involved

- 59 involved, and to procure an official Swiss adherence

ment in regard to the addition of the new countries
would be very simple, in the same manner as the
announcement was made as to the eligibility of France
and England. At my suggestion you agreed to cable me
the text of such a brief announcement.
In my cablegram No. 1121, sent at 7 p.m. on

No. 463 of November 17, 2 p.m., could be definitely

taken as the basis for negotiations. I told you that
M. Baumgartner had not been able to get into touch with
Minister of Finance Auriol, who was coming by motor car

from Toulouse to Paris. My friend was confident that
the Minister would approve the statement and arrangements described in your cablegram, and he promised to
give me definite word before noon on Wednesday.
Under cover of a note dated November 17, 1936,

I mailed you in our diplomatic pouch the original text
of the communication addressed to you under date of
November 9, 1936, by the Minister of Finance of
Belgium.

- 60 Belgium.

M. Beumgartner telephoned me at 10:30 on the

morning of November 18 that Minister of Finance Auriol
had returned to Paris and had found himself in complete

agreement with the proposals as set forth in your
cablegram No. 462 of November 16, 12 midnight. I
gave you this information in my cablegram No. 1123,
sent at 12 noon, November 18. I informed M. Baungartner

of the contemplated form of press release quoted in
the Department's No. 465 of November 17, 4 p.m.

I put in a long-distance call for you and obtained
communication with you at 2:45 p.m. on November 18. I

gave you the information in regard to the French approval,

which I had sent in my cablegram. I told you that I
should have to leave for Belgium that night if it was
desired to finish arrangements by Sunday. I told you
that I could attend to the negotiations in Brussels the
following day and could telephone or wire you from there
the results. You said to telephone you, if possible,
and confirm by cable, and for me not to hesitate to
use the telephone freely. It was understood that I
could not make any arrangements with the Dutch or Swiss

officials until I had procured the necessary approval
of the Belgian officials to the new draft statement.
If such approval was obtained, however, I was to
endeavor to effect the necessary arrangements in the
Netherlands on Friday and In Switzerland on Saturday.
You were agreeable to my plans and told me to leave
Paris

- 61 -

Paris that night. You had not yet received the
British response to the declaration. It would be
necessery that I have word of this before I could
talk with the Belgians. I was, however, to prepare
to depart from Paris and await word from you in Brussels,

if necessary, before seeing the officials there.
At 3:45 on the same afternoon, November 18, you
telephoned me that you had heard from the British and

that your statement was found entirely agreeable to
the Chancellor of the Exchequer, provided it was

acceptable to the Belgians. I was, therefore, to go
on to Belgium that night and to keep you informed

currently as to the results of my conversations.
Consequently, I telephoned at once, at 4 p.m., to
Secretary Baudewyns of the National Bank of Belgium
(Governor Franck was on a holiday in Egypt) and arranged

to see him on the following morning at 9:45. He was to
take me to see Minister of Finance de Man. At 5 o'clock
I telephoned M. Baumgartner, and he said that it was

also his understanding that the British were entirely
in agreement with the French and Americans on the

22, to learn the complete results of the trip and to
plan for the necessary French announcements.

Consequently, I left Paris at 6:10 on the evening

- 62 of November 18 for Brussels. At 9:15 on the morning
of November 19, I telephoned Ambassador Morris to let
him know that I was in Brussels and to inform him of
my plans. At 9:45 I wont so the National Bank of
Belgium, where I was received by Secretary Baudewyna

and M. Mahieu, a Manager of the National Bank of Belgium

who was acting in the place of Governor Franck during

the latter's absence in Sgypt. I showed these two
officials a draft of your proposed statement and
informed them that the French Ministry of Finance had

considered your plan acceptable, as had the British,
subject to Belgium's finding the arrangements and

declarations agreeable. I told them of the plan to
obtain the adherence of the Netherlands and Switzerland

to the tripartite declaration, and then to add these
two countries, along with Belgium, to those nations

entitled to gold reciprocal treatment. I made the
point, however, that I could not proceed further with
this plan unless Belgium's approval in the premises
could be obtained at once. I also made the point that
this new declaration had been drawn up specifically to

meet the Eglgian situation. The two officers of the
Belgian National Bank asked to be permitted to study

the documents. I was to return at noon to the Bank,
and from there we were to proceed to the Ministry of
Finance to confer with M. de Man.
Upon leaving the Bank at 10:30, I proceeded to the
Embassy, where I explained developments to Ambassador
Morris.

- 63 -

Morris. I called back at the Bank at 12 noon, and
MM. Baudewyn and Mahieu accompanied me to the Ministry

of Finance, where we were met by M. Warland, the

General Manager of the Treasury. Before we entered

the private office of the Minister of Finance, I
learned that the Minister had signed and had despatched

his letter of November 9 to you without the knowledge

of any of his technical advisers or of the officials
of the National Bank. This point same out when, as
we were about to go into M. de Man's office, M. Warland
told me he was opposed to the idea of the Government's

giving such a statement, guaranteeing the operations
of the National Bank of Belgium, as had been envisaged
in the draft letter which had been drewn up when I had

been last in Brussels. M. Baudewyna laughingly remarked to M. Warland that his objections were too late
since the Minister had already signed the necessary

letter.
To Minister de Man I explained the situation, as

I had earlier in the morning at the National Bank of
Belgium. He understood that your proposed declaration
was to supplement that of October 13 and he took no

exception to the cancellation of your statement of
January 31, 1934. He indicated definitely that he
stood by and confirmed the original Belgian declaration
of October 17, as well as his letter of November 9.
His one question was in regard to the ranner in which
you

the day and emphasized the one point of possible

difficulty. You told me to inform the Belgian Minister
of Finance that you now understood exactly what the

Belgian situation was and that you would do your very
best to avoid any emberreasment insofar as the American
press was concerned.

At the conclusion of our conversation, I called
the National Bank of Belgium, where I spoke to Secretary
Baudewyna by telephone and asked him to communicate your

reply to Manager Mahieu, and particularly to the Minister
of Finance. It was understood that if M. Baudewyns did
not call me back within a few minutes, the matter could
be considered as wettled. Since I heard no further word
from him, I proceeded with my arrangements. I had
explained

- 65 explained to the Belgiana the proposed schedule for

press releases. I had left them copies of all available documents, and had promised to communicate with

them further from Paris on the following Monday
morning.

From the Embassy I telephoned President Trip of
the Netherlands Bank at Amsterdam and told him I was

proceeding to Ameterdam that night. It was arranged
that he should receive me the following noon, and
that we were then to proceed together to The Hague

where it was to be arranged for Prime Minister Colijn
and Finance Minister Oud to receive us after luncheon.

I explained to Dr. Trip that, for our plans to carry
through, it would be necessary to obtain from the

Dutch officials their adherence to the tripartite
declaration of September 25, as well as their signature
to the declaration which had been drafted on my earlier

visit to the Netherlands.
I telephoned Professor Bachmann, President of the
Swiss National Bank. Professor Bachmann was at the

office of his Bank in Zurich and told me that he
would be there on Saturday forenoon. Fortunately, Dr.
Meyer, the head of the Swiss Department of Finances and

Customs, and also President of the Swiss Federal Council,
was to visit Professor Bachmann at the Bank in Zurich at
9 o'clock on Saturday morning. Sinne these were the two

Swiss officials whom it would be necessary for me to see,
it was therefore arranged that I should come to the Bank
in

- 66 in Zurich as early as possible on Saturday morning.
President Bachmann, who is a very early riser, told
me that he hoped I could reach the Bank at 7 a.m. so
that we could have our discussion before the Finance

Minister arrived. I stressed the importance of the
Swiss being ready to adhere formally to the tripertite
declaration of September 25 and the urgency for speed
in order that everything could be concluded by the
week-end. In accordance with the promise which I had

given M. Baumgartner before leaving Paris, I also
telephoned him at the French Ministry of Finance to
let him know of the Belgian approval of the declaration

and also of my itinerary.
Before leaving Brussels on the evening train for
Amsterdam, I filed with the Embassy a cablegram report-

ing fully to you my visit with the Belgian officials.
Proceeding from Brussels, I arrived in Amsterdam

on the night of November 19. I called at the Bank of
the Netherlands the following noon, where I was received

by President Trip and Director Beaufort. I reviewed
developments to date and gave them copies of all

documents pertinent to your proposed declaration. In
order to simplify matters and to avoid any delay in
The Hague, Dr. Trip and I drew up a short draft of a
statement which we thought would suffice as indicating

adherence of the Netherlands to the tripartite declaration of September 25. We talked straight through
until time for the train to The Houge, without having
any

- 67 -

any lunch. I was sincerely appreciative of the
assistance which Dr. Trip was giving me, since he was

very busy on the day of my visit, which also happened

to be his sinvieth birthday.
Upon our arrival in The Hague, we went directly

to the office of Prime Minister Colijn, where Minister
of Finance Oud also joined us. MM. Oud and Trip signed

and delivered to me their technical declaration in
exactly the terms which had been drafted on my previous
visit and had been quoted in my cablegram No. 1075 of

November 4, 10 a.m. Prime Minister Colijn took a very

active interest in the discussions and insisted on
reading to us the full text of the declaration of
September 25 before consenting to adherence thereto.

After he was satisfied in his own mind as to the entire

deliver to the respective Foreign offices, not later
than Saturday afternoon, the message of Dutch adherence

in the terms which Dr. Trip and I had drafted. The
schedule for press releases was then confirmed and it
was agreed that I should telephone Dr. Trip on Monday

morning to give him the latest news in regard to
Switzerland and any further press communiques which I

might have by that time.
After leaving the Prime Minister, I proceeded to
our

- 68 our Legation, where I explained my visit to Minister
Emmet. I put in a telephone call for you and gave
you the above facts. I also sent a cablegram
confirming the report which I had given you over the
telephone.

From the Legation I went directly to the railway
station and got the 5:25 train to Brussels. Normally
there should have been a margin of 25 minutes in
Brussels, but the Hague train was 10 minutes late on

National Bank of Switzerland at Zurich at a a.m.
President Bachmann and his assistant, M. Pfenniger,

who had met me at the train, told me they had already
been at work for some time. I explained to them our
plans for further statements and gave to them copies
of such draft announcements as I had left with the

Belgian and Dutch officials. We then drafted a
telegram to the Swiss Ministry for Foreign Affairs
at Born, directing that Ministry to send the necessary
telegraphic instructions immediately to the Swiss
diplomatic representatives at Washington, Paris and

London, for delivery to the respective Foreign offices
not later than Sunday forenoon. In this telegram we
used the same text of adherence to the general

principles of the tripartite declaration of September
25.

- 69 25 that had been employed in the Netherlands. To
have followed the Belgian example of preparing a

statement in almost identic terms with the tripartite
declaration would have involved delay in cabling,
because of the length thereof, and would have added

little to the strength of the declaration.
When President Meyer arrived at the Bank at 9
o'clock, he promptly approved the telegram which had
been drafted, and this was despatched to Bern. To the

Swiss officials I explained in detail the schedule for
press releases and promised to telephone President
Bachmann from Paris on Monday morning any further

available texts of communiques. I called at our
Consulate General at Zurich after the foregoing
arrangements had been completed, and from there

telephoned Minister Wilson at Bern at 11 a.m. to

inform him of the negotiations. I lunched with MM.
Bachmann and Pfenniger. In the afternoon, I reached

you by long-distance and gave you the Zurich story. I
confirmed this by cablegram from the Zurich Consulate

General. I left Zurich on the night train and arrived
in Paris on Sunday morning.

In the conversation which I had with you at 4 p.m.
from Zurich on Saturday afternoon, you told me to
telephone you from Paris at 5:30 on Sunday afternoon

to give you the latest news. You told me that Judge
Moore was following my oablegrams and was much interested

in the entire situation. I suggested that you have the
State

- 70 State Department be on the watch for messages from the
Dutch and the Swiss Legations in Washington and forward

these to you promptly. You were pleased with the
smoothness with which our arrangements had been made.

I told you that I thought it would have been impossible
to have completed the arrangements in any manner other

than by personal visit, since so many different officials
were involved in each country and since it was so much

easier to explain the various phases of the situation
face to face, with documents available, then to attempt
to do this by long-distance telephone. You asked me
when I was to see the Governor of the Bank of Sweden.

I told you that Governor Rooth would be in to see me
on the following Tuesday or Wednesday. You were pleased

over this prospect.
As previously arranged, M. Baumgartner called at
my office at 11 o'clock on Sunday morning, November 22.

I told him of the results of my travels. He made
arrangements to receive from the French Foreign office,
as soon as they might arrive, the declarations of the
Dutch and Swiss Governments. M. Baumgartner submitted

to me the text of the communtque which the French

proposed to give to the press at 9 o'clock on Monday

night for publication Tuesday morning, and I incorporated this in my cablegram No. 1138, November 22, 1 p.m.

M. Baungartner learned that the Dutch declaration
had already been received through the Dutch Legation

in Paris. When I telephoned his at 5:15 on Sunday
afternoon

- 71 afternoon, he said the Foreign Office had not been

able to find any one at the Swiss Legation but that

there was still plenty of time for their declaration
to be received.

After talking with M. Baungartner, I put in a

you
of
the
had
one we details

call for you and obtained communication at 5:45 p.m.

M. possibly
States for one week. I was against

the such a on the French
too much
was an

official furthermore, visiting dentally sent I gave the idea at publication would mentioned since the the o'clock, I United did attract substance not the of and visit the think idea announcements. of discussed it press telegram Baumgartner part attention; various appropriate of which You this inci- I

time for such a visit, and particularly by an official
who was just being relieved of his important position,
even though a promotion was involved, because of

negotiations his fairness and desire to cooperate with
us. You also told me confidentially of the hint received
by my colleague in London that the British might be
inclined to look upon Sweden as their particular charge.
Nevertheless, we were interested in getting this country
lined up in our reciprocal arrangements. The possibility
of my visiting the United States at a later date was
discussed

- 72 discussed.

I telephoned M. Baungartner at 10 o'clock on
the morning of November 23. I suggested one or two
changes in the text of the French communique that was

from their Missions in Washington by noon on Saturday,

and that you would give release thereto at 10 o olock
that morning, Monday, November 23. Your own communique

was to be given to the press at 4 p.m. M. Baungartner
confirmed again that the French communique would be

given out here at the corresponding hour, namely,
9 p.m.

At 10:15 a.m. I telephoned President Trip at
Amsterdam. I read him the text of the French communi-

que and confirmed the hours for giving notice to the
press. He was much pleased over developments and

congresulated me on the results of my trip. He said
everything was in order so far as the Netherlands was
concerned. I telephoned President Bachmann of the Swiss

pertinent information. He was very happy over the
successful

- 73 -

successful termination of our negotiations and he said
he would pass the word on to the appropriate officers
in the Ministry of Finance and his own Bank. He hoped
our cooperation would continue. At 12:30 M. Baudewyns
telephoned me back and asked me to read to him once

more the whole text of the French communique in order

that his secretary could take it down.
In my cablegram No. 1140, November 25, 5 P.M., I
summarized the day's developments and let you know

that the Paris financial press carried correct reports
from Amsterdam and Bern of the official adherence of
the Dutch and Swiss Governments to the general

principles of the tripartite declaration of September
25. I also told you that official ennouncement had
been made of the appointment of M. Baungertner as
General Manager of the Credit National. When I had

talked with M. Baungertner during the forenoon, I
had asked him about the outlook in France, and he

thought there might be a quiet period prior to the
rush which would accompany the passage of the budget

the last week in the calender year.
You telephoned me at my home at 2:15 p.m. on

November 24. You told me that there had been a good

press reaction in the United States to the new announcements, although naturally not in such sensational manner

as the original declaration of September 25 was greeted.
I told you that the communiques of the French and

British Treasuries had been carried in full in the
European

- 74 European financial press and that comment was entirely

complimentary and hopeful as to the future. I also
summarized to you the conversation which I had had

during the forenoon with Governor Rooth of the

Sveriges Riksbank. You mentioned, incidentally, that
you did not desire that I return to the United States
before January.

In my cablegram No. 1142 of 5 p.m., November 24,
I gave you certain press comment on the extension of

the tripartite arrangement, and I reported in detail
my lengthy conversation with Covernor Rooth. It was
understood that no decision would be reached by the
Seandinavian countries with regard to adherence to

the tripartite declaration until after the meeting,
to be held at Helsingfors on December 12, of the
Central Bank Governors of the four countries, Sweden,
Norway, Denmark and Finland.

In my daily telegrams I continued to keep you
informed upon press comment with respect to the new

additions to our reciprocal gold arrangement, my
message No. 1146 of November 25, 5 p.m., having con-

tained particularly pertinent remarks. My cablegram
No. 1155 of November 27, 6 p.m., reported the growing

the faithful offorts of the Dutch Stabilization Fund
to hold

to hold the florin at a fair level, which certainly
reveals not the slightest desire to depreciate that
currency any further than may be reasonably necessary

to permit 6 hearable equilibrium.
My message No. 1167 of 5 p.m., November 20,

reported the resolution adopted at Pregue by the
Central Bank Governors from Gzeehoslovekia, Yugoslavia

and Rumania, stressing the need for definitive monetary

stabilization, urging solution of the problem of
international indebtedness, and recommending an

international examination of general methods of
payment. I also mentioned a press report from Warsaw

to the effect that the Polish Minister of Finance was
strongly opposed to the devaluation of the zloty.
On the morning of December 1, T visited M.

Cariguel et the Bank of France. We talked over the

results of devaluation and he told me, in strictest
confidence, of the disappointing extent of repatriation
of French capital. He mentioned the various reasons
therefor. M. Cariguel explained to me why he had ao
far been able to make little use, since devaluation,
of the facility for procuring gold in New York, in
accordance with the terms of the tripartite arrangement.
He said it was the handling charge of one-quarter of one
per cont which made it too expensive for him to deal in
gold on our market in present dirounstances. He figured
that even to earmark gold at New York would cost about

10 centimes on the dollar, while to ship it the onequarter of one per cent charges made a difference of
about

- 76 -

about 32 centimes on the dollar. He said that due to

the necessity of holding the frane at a very fixed
rate at the present he could not afford variations
which would permit payment of these charges. He did
not make these remarks, he assured me, in any sense

critical of our regulations but more in an apology for
his failure to have had recourse to American gold
facilities. He stressed to me his desire to trade with
the Federal Reserve at New York whenver and to as great
an extent as may be possible.
As mentioned in my cablegram No. 1184 of December

2 and various other messages, the Lombard Street
editor of the London FINANCIAL NEWS has from time to

time argued that the pound sterling was overvalued

against the dollar and that we were not following a

fair policy in holding the dollar-sterling rate around
4.90 by gold purchases in London. I should remark that
this view has not been expressed recently by any other

of the leading British financial journals, inssfar as
I am aware, and my official contacts of the Bank of
England and the British Treasury have not said a word

on this point to me in any of our talks since the
arrangement of September 25 was announeed.

From the beginning until the middle of December,

there were various reports current here in regard to
a prospective offer by France in settlement of the
war debt to the United States and of possible French

borrowing in the United States. I gave you this
current

- 77 current gossly as it developed.
You telephoned me at my home at 5:45 p.m. on

Sunday, December 6. You asked about the French situ-

ation in general and about French views on the English
succession crisis. You also asked whether the war debt
talk hed quieted down here. You mentioned the possibility of my future cooperation with your Treasury.
At 3 p.m., December 8, Sir Frederick Phillips,
Undersecretary of the British Treasury, who had been
in Geneve for some days attending a meeting of the
Budget Committee of the League of Nations, celled

on me while en route through Peris to London. This
was the first occasion on which Sir Frederick had ever
visited me in Paris. As you may recall, I was a member
of the American monetary group at the Preparatory
Conferences at Geneva in November, 1932, and February,

propriety of my calling on Sir Frederick in London, I
was quite pleased that he apparently was not himself
concerned over such a question, and was good enough

to return my call on his first visit to Paris. My
cablegram No. 1216 of 7 p.m., December 8, reported
the

- 78 the conversation which I had with Sir Frederick and

indicated his concern over the position of the French

Stabilization Fund, Sir Frederick was particularly
pleased when I gave him a copy, which I had just

received that day, of your statistical publication
on capital movements. You had told me that you had

sent a copy directly to the Chancellor of the Exchequer, but Sir Frederick had, of course, not seen
this, being absent on the Continent. He remarked that
the publication appeared to contain information of e
type which he said he had frequently but unsuccessfully
sought to obtain on his own market.
on the forenoon of December 9 I visited M. Cariguel
again at the Bank of France, and in my cablegram No.

1219 of 5 p.m. I reported his further remarks, perticularly concerning his problem of dealing in gold on the
American market. In this message I mentioned, incidentally, the rumor that M. Georges Bonnet might be named
French Ambassador to the United States to undertake

war debt negotiations. I also told you that I had
received from Governor Rooth a letter requesting
certain data to supplement the information which I

had given him on his visit to Paris regarding reciprocal
gold arrangements. I telephoned him at Stockholm the

next morning to give him cart of the information which
he desired, and mailed an envelope, which he was to

find at Helsingfors, giving him certain documentary
information.
On the

- 79 On the evening of December 9 I visited M. Rueff
at the Ministry of Finance, who had succeeded M.
Baungartner as Director of the General Movement of

Funds. Without making the slightest reference to

Sir Frederick Phillips, I cautiously and unofficially
let M. Rueff know the gossip that was circulating in
regard to the possibility of France's belag obliged
to resort to exchange control, and exphasized the
seriousness of such a blow to the arrangements for

which we had all worked. He at that time gave me
assurance that steps would be promptly taken towards

liberalizing the French gold policy, which he thought
would constitute an important step forward in general

recovery. I informed you of this interview in cablegram No. 1222, filed at 9 p.m. on December 9. on the

following day I telephoned Sir Frederick Phillips in
London and gave him a confidential hint as to prospec-

tive changes in French policy. He appreciated this
service very much and indicated his desire to continue
to cooperate with me. As my messages reporting conver-

sations with him have revealed, most perticularly the
cablegram which I sent on August 28, wherein I told

you what the British attitude would be in the event of
devaluation of the frans, Sir Frederick talks to me
with considerable directness, and so far has given me
absolutely no misleeding information.
on December 15 I sent at 10 a.m. my message No.

1255 recounting my week-end visit to Basel, where the

80 -

B.I.S. Directors had held their monthly meeting. I
shall not summarize this message, which I made longer

the favorable public and press reception of these
announcements. I mentioned Governor Norman's remarks

about the American problem with respect to foreign

repatriation of capital, & dishoarding of savings, and
a rise in the rente market, all of which are essential
to assist the Government to do the heavy borrowing

which will be required over the coming year. Dr.
Schacht, as I reported, was much more reasonable at
the December meeting than he had been in October and

November, and I believed I sensed a genuine desire on

his part to try to fit into international monetary
arrangements as soon as it is at all possible for him
to find an excuse to take such a step. I am convinced
that if he obtained SOLIC satisfaction with respect to

- 81 his advocacy of raw material sources for Germany, he

would promptly "align" the reichamark, just as Italy,
after her success in Ethiopia, devalued the lira.
My cablegrams since December 15 have stressed the

continuing strength of the Dutch florin and the operations of the Dutch Stabilization Fund, through
purchasing sterling and dollers, towards preventing a
rise in the Dutch currency. I have recorded the
issuance of the French National Defense loan in an
effort to procure the surrender of gold and the conver-

sion of gold deposit certificates and of the Auriol
"baby" bonds. I have recounted the progress made in
the French Parliament on fiscal and budgetary

"sterilization.*
Since talking with President Bachmann at Basel
on December 14, I have received from him a rather long

letter referring to certain technical points which he
had raised with the Federal Reserve Bank of New York

in regard to gold dealings. I told President Bachmann
when I was last in Basel that I might possibly be
visiting Washington within the next few weeks, and I

promised to discuss informally with the appropriate

officials in the United States the technical points
which he raised, if he was willing to let the matter
rest

- 82 -

rest until I might make the trip. I am, therefore,
holding the letter tentatively without action. If
I learn within the next few days that I am not likely
to visit Washington early in the year, I shell forward
copies of the letter, in English translation, to you
for such attention as the matter may merit.
In cablegram No. 1287 of December 22 I reported

the decision of the Central Bank Governors of Greece,

Yugoslavia, Rumania and Turkey to the effect that they
were unable for the moment to adhere to the tripartite
understanding.
I have today, December 28, sent you cablegram No.

1295, dated 11 a.m., in which I referred to my oablegram
No. 1142 of November 24, 5 p.m., and quoted to you the

pertinent paragraphs from a letter dated December 23,
in which Governor Rooth of the Sveriges Riksbank gave
me his summary of the opinions expressed at Helsingfors
on December 12 by the Governors of the four Scandinavian

Central Banks in regard to the tripartite declaration of
September 25, 1936, and the subsequent developments

towards supplementing and implementing this declaration.
I am sure you were pleased to see the acknowledgment

of the debt of gratitude which these Central Bankers

felt was due the United States for the initiative
which our Government had taken in the tripartite and
subsequent arrangements. On the other hand, it is

disappointing to note that there is, in the opinion of
Governor Rooth, apparently little immediate prospect
of any

- 83 of any one of the four countries adhering to the
tripartite arrangement. The reasons given for this

attitude are chiefly that: (1) the four countries are
endeavoring to stand together on monetary questions,

and no one of them is inclined to act unless the

tite arrangement. In my conversations with Governor
Rooth, I have made it clear that we were not approaching

the Soandinavian countries, but I do not feel the
matter should be forgotten. I have some confidential
ideas on the Scandinavian situation which I will
communicate to you at an early opportunity.
In conducting the negotiations which I have outlined,

perhaps in too greet detail in this long letter, I have
been impressed by the favorable reaction of the officials
in the smaller countries, Belgium, the Hetherlands and

switzerland, to our personal approach. That is, in the
past

- 84 -

past, these countries have felt that in most instances
they were obliged merely to follow along after the
great powers, and were shown no individual consideration.

When, for instance, the late Governor Strong of the
Federal Reserve Bank of New York and, more recently,

Governor Harrison, have visited Europe, they have not

pleasure at receiving me, as your personal representative, and at having the knowledge that through a

telephone call from their capitals I could inform you
of their sentiments and obtain your prompt reaction to
their individual problem.
While I have observed your desire that our agreements be negotiated with Treasuries, I have in each of
the three countrios recently added to our group made
my approach through the Central Banks. The reason

therefor is quite simple. I have had the pleasure
of meeting at Basel over several years the Central
Bank Governors in each country concerned and have, on

- 85 -

I believe, been a little pleased to be the intermediaries through which our approach to the higher

officials was informally made. While I do not suggest
the slightest criticism of the formalities which must
usually attend straight diplomatic negotiations, I
respectfully Aubmit that the direct method which we
followed in our informal arrangements with the three
countries concerned has been found effective.

Faithfully yours,

H. Merle Coohran,

First Secretary of Embassy.

HMC/wgs

Paris, December 28, 1936.
PERSONAL AND

STRICTLY COMPIDERTIAL

The Honorable

Henry Morgenthau, Junior,

Secretary of the Treasury,
Washington, D. C.
Dear Mr. Morgenthau:

In my letter dated October 26, 1936, I provided
you with a ehronicle of events culminating in the
tripartite monetary arrangement of September 25, 1936,
and reported the immediate results thereof, up through

October 4. In the present communication I shall

continue this chroncile, giving particular attention
to the implementing of the tripartite arrangement to
permit of gold reciprocity between the United States,
Trease and England, and to the supplementing of the

arrangement between these three countries to include
Delgium, Switserland and the Netherlands.

I telephoned you at 2 p.m. on October 5 and I sent
as 8 Pum. my eablegram No. 968, which confirmed the

BOND 2 had given you over the telephone. This dealt

principally

.2principally with the devaluation of the Italian lira
and the activity on the Paris stock market. In my
telegram I also included an expression of opinion
obtained by telephone from Dr. Jacobason at the

R.I.S. with respect to Italian and German monetary

policies. The B.I.S. observers approved of Italy's
step, and thought Germany was making a mistake in not
endeavoring to cooperate in some manner with the

procure for you specific information in the promises.

After talking with you I got into touch with Dr.
Pennachio, the Bank of Italy representative in Paris,
and asked him to provide definite facts on the monetary

step that had been taken in Italy. While Dr. Pennachio
had received considerable information on this subject,
he was anxious to be of direct service and telephoned
Governor Azzolini of the Bank of Italy at Rome. Later
in the evening I talked with you, at 8:45 p.m., and gave

you the official information, as relayed through Dr.
Pennachio. Before I spoke with you on this occasion,

I got into touch with M. Carigual at the Bank of France
and found that he had done a good business in obtaining

sterling on that day, but that there had been few dollars
in the market. Re had been able to obtain some gold
against

against dollars in London.
When I talked with you on the night of October 5
you said that you desired that I let the French know
that you were working on the arrangement to yield gold.
You reminded no that there had been three parties to
the monetary arrangement of September 25. In view of

this partnership you thought it fair to give England
the same facility for gold as France. You said you
were seeing Mr. Mallet, the British Charge d'Affaires
at Washington, to see if his people were interested.
You had told your press correspondents that any technical arrangement would be made public. You were planning
an errangement which should be on a reciprocal and on a

twenty-four hour basis. You desired to find out whether
the French wished to make an announcement of reciprocity

simultaneously with you. You hoped that the three
original parties could stand together on this new
matter. Your declaration would be an amplification of

the statement of January, 1934. You did not insist that
there be declarations from the French and British, but
you did state that you were obliged to make en announce-

ment. I told you that there was a French cabinet meeting
that night at which the question was to be decided as to
the application of a tax of 50 per cent on market transactions made just prior to devaluation. I was to see
the Minister of Finance at 9:30 the following morning.
while awsiting your call on the evening of October
5 I drew up a draft of my own suggestions with respect
to an

to an announcement for giving gold by the United States

under the new arrangement. I mentioned my ideas briefly
to you in our conversation by telephone. On the morning
of October 6 I took the liberty of amplifying and sending
to you my views in cablegram No. 970, dated 9 a.m. In

this, as in all of my messages, I gave you my frank
opinion. I was concerned lest the statement which you
proposed might eventually prove to be too narrow, and I
hoped that you might yield gold to foreign "monetary

authorities."
At 10 o'clock on the morning of October 6, I called

on Minister of Finance Auriol. This was my first visit
with the Minister of Finance since the night of September

25. M. Auriol reiterated et this time his appreciation
of your cooperation in the tripartite move and insisted
that passage of the French monetary (devaluation) law

would have been absolutely impossible if it had not
been accompanied by the three-power agreement. I told
him of witnessing some of the debate in which he defended

his policies, and he reminded me of the bitterness with
which he was attacked by several of the parliamentary
leaders who personelly shared his own views in the

in the future. I think I told you previously that I wes
convinced that M. Auriol's exchange of felicitations
with you on the night of September 25 was his first
occasion

-5 ocession to use the transatlantic telephone. He is
a very direct individual and appreciated the expeditious manner in which we had arranged matters through

direct contact, in contrast with the complications and
delays that would have necessarily been involved if the
more formal procedure of diplomatic correspondence had
been followed.

Incidentally, the Minister mentioned the serious
embarrasament which had been caused him in the early

stage of the conversations through M. Monick's excessive

zeal. M. Auriol let me understand confidentially that
M. Monick's visit to you last June had been inspired by
certain of Monick's friends, and that he, M. Auriol,
was then too new in office to object thereto. It was
understood, however, that Monick should go to the

sent an emissary to the United States without the
President of the Republic even having knowledge thereof.
M. Auriol seemed convinced of the inadviaability of

utilizing M. Konick's services on any future journeys
to the United States, and I said nothing to encourage a
further

further mission on M. Monick's part.
M. Auriol thought that we had taken a big step
forward through the three-power declaration. He was
greatly pleased at the reception given this declaration
by most of the European countries, the principal exception being Germany. He was particularly gratified over

Italy's action. He told me that he had not desired
that Dr. Schacht should figure in the original negotiations principally because he felt that Dr. Schacht
and Governor Norman were so close that there night have
been some Anglo-German collusion which would have made

agreement difficult. The Minister was anxious to see
what Dr. Schacht would eventually do. He said that he
was sending word to Dr. Schacht, by Governor Labeyrie

of the Bank of France, since the two were to meet at
the B.I.S. that week-end, that whenever Germany might

see fit to follow the precedent set by France, the
latter would be ready to cooperate with Germany toward

various Treasuries. That is, no hopeful progress toward

monetary stabilization could be achieved until military
policies might be brought within the paying capacities
of the countries concerned. The Minister said that
while we had made considerable progress, there was much
more

more to do in the way of consolidating our gains and
looking to future economic and monetary rehebilitation.
He expected to be in contact with Premier Van Zeeland

of Belgium within the near future on plans for cooperation in the promises, and promised to inform me of the
course of their discussions.
In our conversation, M. Auriol brought up the
subject of war debts owed by France to the United

prosperity might be achieved, it would be his pleasure
and opportunity, say in another year or a year and onehalf, to make spontaneously to the United States an offer

of final settlement of the wer debt. He said that such
an offer would be arrived at after studying all phases
of the question, including the Hoover Moratorium, the
Lausanne Agreement and the character of the constituent

parts of the indebtedness. I could not possibly conceive
the idea from this conversation that Minister Auriol
anticipated opening the question within the immediate

future, and, although I have made no inquiries in the
premises, I an of the opinion that recent moves with
respect to the war debts, which have attracted much
attention in the French and American press, did not

originate with Minister Auriol.
The purpose of my visit with the Finance Minister
was

was to ascertain whether the French would be interested
in making an arrangement and a declaration in regard to
gold of the character which you had suggested to me on

the preceding evening. The Minister of Finance told
me that he desired to consult his assistants and the
appropriate officers of the Bank of France on this
subject, and would endeavor to give me an answer

during the course of the day. The above information
was incorporated in my cablegram No. 971 of October 6,
12 noon.

After leaving the Minister of Finance I talked
with M. Baungartner, Director General of the Movement

of Funds Section in the Ministry, and explained to him
the purpose of my visit with M. Auriol. M. Bausgartner
promised to call me back as soon as the Minister had
reached a decision. M. Baungertner himself was

confident that they would act in complete accord with
your desires.
You telephoned me at 12:20 noon on October 6. You

told me that the British Kinbassy in Washington was
pleased with the offer which you had extended them to

participate in the gold declaration, but that you had
not yet had time to receive the reaction from the
British Treasury in London, to which the Embassy had

referred your proposition. I told you of my visit with
the Minister of Finance and 10's you know that I would
communicate further news as soon as I might obtain the
definite French answer. I mentioned in our conversation
that

that I had in my cablegram No. 970, sent at 9 a.m. that
morning, presumed to present my own views on the matter

of a declaration.
At 1:05 p.m. I talked by telephone with M.
Baungartner, who was happy to tell me that his Minister
of Finance was in complete accord with you on the matter

reciprocity with the British.
I telephoned you at 2:30 p.m. to give you the
Minister's answer, as transmitted through M. Baungartner.
In some manner, which I never understood, your assistants,
who were with you when you Were speaking, gained the

impression that I had placed too much stress on the

issuance of a declaration. I assured you that there
had been no misunderstanding on this point and no

insistance on my part that the French should make any
declaration whatever. The French had been appreciative

of your offer to participate in a statement and did not
question in the slightest the propriety of such participation. You told me that you were anxious to get
the matter claured up in a short time and that you
would call me back as soon as you had the official
British reply. In the meantime, there was nothing
further for me to do here.
In my cablegram No. 972 of October 6, 5 p.m., I

- 10 gave you the market news of the day, which was princi-

pally to the effect that sterling was being offered
heavily against the frano. The new Italian lira was
quoted at exact perity in Paris.
is I was returning from my home to the Embassy
at 2:15 on October 7, you endeavored to reach me by

telephone, but we did not succeed that day in establishing connection. My cablegram No. 975, filed at 4 p.m.
on October 7, gave the news of the day, including the

fact that sterling continued to be offered in large
amounts at the Bank of France, and the report that
the Swiss had resumed contracting gold at London for
delivery the following week, it having become necessary

for the Swiss at one time to cease operations until
their bookkeeping might catch up with their buying.
In my cablegram I quoted at some length a statement

made by Mr. Chamberlain, Chancellor of the British
Exchequer, on the proceding evening, wherein he referred

to the tripartite arrangement.
On October 8 you telephoned me at 4:45 P.M. You

said that a very satisfactory answer had been received
from Mr. Chamberlain, and that you were working on a
reply. You had prepared a proclamation and a communique

for the press. You said you would cable both of these

to me that night. A representative of the British
Embassy was coming to see you shortly. You said that
you were also sending me a copy of Mr. Chamberlain's

message. You made the point that you were obilged to
make

- 11 make a statement. You thought the British would be
disposed to make a statement and you wanted the French

to feel free to do likewise if they cared to do so
after having seen your statement. This would be

entirely voluntery, however, on the part of the French.
You hoped to issue your statement on Sunday morning,

if possible, to become effective on Monday. It was
agreed that I should arrange to have your messages
decoded as early as possible so that I could show them

to the Minister of Finance and then telephone you back
as soon as I had obtained M. Auriol's reaction thereto.
You incidentelly referred to my cablegram of October 6,
in which I had expressed my own opinions, and you
assured me that these were always accepted in the some

spirit in which they were sent, whether or not you might
be able invariably to act favorably thereon.
Later in the day, at 9:45 p.m., you telephoned are
at my home. You stated that there had been despatched
to me a copy of the new statement signed by the President.

You said this was a legal statement drawn up by attorneys.
You added that since Monday was a bank holiday, Columbus

Day, you were giving out your statement at a 4 o'clock
press conference ON that day, instead of Sunday as

originally anticipated, and that the now procedure
would go into effect on Tuesday. You let me know that
you were giving the British the same information that
you were giving me and that you had told the British
that, once the statement was issued, they should get into
touch

- 12 touch with the Federal Reserve Bank at New York toward

working out details of gold reciprocity. You told me
that in your press conference you would answer any

general questions, but that you would not explain

that the gold price was to be fixed on a daily basis.
You told me that I could leave with Minister Auriol
copies of the messages you were sending no that night,
and it was arranged that I telephone you back at 2:30

your cablegram No. 391, giving the text of the communication from the Chancellor of the Exchequer, and No.

393, setting forth the gold statement which you intended
to issue on Monday afternoon. The second of these

messages did not arrive until after 9 o'clock, and,
because of errors in transmission, it was no possible
to complete decoding thereof until 11:45. AS soon as
I had received the finished copies from the code room,
I proceeded to the Ministry of Finance, where I was
received by MM. Auriol anú Beungartner. I summarized
developments to them andmentioned the idea of your

making a declaration at 4 p.m. on Monday, October 12.

13 -

I then went with M. Bawagartner to his office; I let
him read the two messages and then left with him

excerpts therefrom, consisting of the text of Mr.
Chamberlain's communication and the text of your

proposed declaration. M. Baungertner told me that
he would talk with Undergovernor Fournier of the Bank

of France at 1 o'clock that afternoon and would try to
give me an answer between 4 and 5 p.m.

After returning from the Ministry of Finance, I
put in a cell for you, at 12:50 noon, and got connection at 2 p.m. I reported the developments of the
morning to you. When I mentioned that your proposed

statement had come through in form practically identical

with that originally drafted, you volunteered that you
were working under terrific pressure, which I easily
understood. You said that the first step, the tripartite declaration, had been a great auceese and that
you had to move cautiously with this second step. You
gave me additional information which you said I could
pass on to the Bank of France.

Consequently, at 3:25 p.m., I telephone M.
Baumgartner, who was then at Governor Fournier's office.

I told him that I had talked with you. I explained
that you desired that the French and British give out
your statement to the press; that they comment thereon;

and that they indicate that they are going to give gold
to the other two parties of the agreement under similar
conditions, that is, that gold moves on all sides of
the

- 14 -

the triangle; and, finally, that the declaration be
given to the press at 4 o'clock in Washington and 9

o'clock in Paris and London. I let M. Fournier know
that he was free to discuss with the Federal Reserve
Bank of New York the technical details incident to
procuring a working arrangement with the United States

along the lines being consummated with the British, as
set forth in Mr. Chamberlain's memorandum.

At 5 p.m. on October 9, I sent cablegram No. 983,

letting you know that the Paris bourse had turned quite

weak, with a decline in rentes, and that the reflux of
capital to France had slackened, for domestic and

international political reasons.
At 5:45 I telephoned M. Baumgartner and made an

appointment for 7 o'clock that evening. At 7 o'clock
he gave me the British communiqué which the Bank of
England had telephoned through the Bank of France.

The French were willing to give a simultaneous

declaration and were preparing it, their declaration,
and translating the statement of the Secretary of the
Treasury into French, for issuance at 9 o'clock on
Monday night.

At 9:15 p.m., October 9, I spoke with you from
my home. I told you that I had given your message to
MM. Fournier and Baumgartner, and that they had talked

with London and had received the text of the British
communique. You told me that you had not yet received

the British reply directly. You would telephone or
cable

- 15 cable it to me as soon as received. When I told you
that I was planning to leave for Basel on Saturday

night, to be there for the B.I.S. meetings, you told
me that you wanted the text of the English declaration
cleared up before I left. I mentioned in this conversetion the sending of a special emissary by Dr. Schacht

to Minister Auriol.
At 10:20 a.m., October 10, I talked by telephone
with M. Baumgartner. I told him of my conversation
with you of the preceding evening and mentioned that

you had not yet received the official text from the
British. M. Baungartner said that he had that morning

received the text officially through his Financial
Attaché in London, and that this was exactly the some
as the text which had been received by telephone through
the Bank of France.

In my cablegram No. 985, sent at 1 .., October 10,
I.let you know that the French financial press was
continuing to criticize French legislation and regulations
against elleged hoarders and speculators, it being felt
that such measures were tending to prevent the reflux

of French capital. I also reported that I had talked
with M. Cariguel during the arming. He had told me
that the had worked out with the Federal Reserve Bank

at New York a forty-eight hour arrangement on gold.
at 3:15 p.m., October 10, you telephoned ae at my

home. You stated that the British had given to you the

official statement, which was entirely satisfactory.
You

- 16 You had not checked this against the one which I had

telephoned you the preceding night. I let you know
that I was examining M. Baungartner's French trans-

lations, and it was understood that these translations
were to be sent to you. You approved my deperture for

Basel that night, for return to Paris on Tuesday morning,
but you wanted me to make sure that the French were not

to permit any leek before Monday night.

At 7:15 on the night of October 9, I had received
from M. Baungartner the text, in English, of the
communiqué which the British planned to give to the

press. I had informed you of this in our conversation
by telephone on the night of October 9. At 18:35 noon,
October 10, M. Baumgartner transmitted to me a French

trenslation of the British communique and alsc a French
translation of the declaration which you proposed to
make. I checked these translations and called M.
Baungartner back at 4:30 p.m. at the Ministry of Finance.
He agreed to one or two changes which I suggested and

he promised to maintain absolute secrecy until the
communiqués sight be released at 9 o'clock OR Monday

evening. He also promised that he would cable to his
Financial Attache in Washington the text in French of
the communiqués which he was issuing, in order that
these might be communicated directly to you.

Consequently, I left Paris at 10 o'clook Saturday
night, October 10, and spent Sunday and Monday in Basel.

In ay oablegrea No. 992, filed at 11 a.m. on
October

- 17 October 13, I summarized the information which I

probably acquired an even greater significance than
originally conceived.
I lot you know the manner in which the Swiss and
Dutch Central Banks were conducting their currency

measures. I told you of the Kritish and Italian
opinions. I particularly stressed the unhappiness of
Dr. Schaeht over having not been informed, through the

B.I.S. or otherwise, of the plans for the tripartite
arrangement. Finally, I let you know that it was
generally agreed at Basel that the French had been

cablegram above-montioned. I told you that the
atmosphere here W&A more optimistic and that the

tripertite gold reciprocity announcement hed appeared

- 28 as scheduled and had been well received, with the

slight exception of the "day-to-day" character thereof.
You told MG that the story had gone over very well in
the United States and that the press had been quite
satisfactory, the best story having appeared in the
NEW YORK RERALD TRIBUNE.

In my cablegram No. 993 of October 13, 5 p.m.,

I made the point that the announcement of the precoding
evening of technical arrangements for reciprocal gold
movements between the French, British and American
Stabilization Funds had enabled the French Government

to display evidence that the agreement into which they
had entered was fully equipped with means to make it

effective.
At 4 p.m. on October 14, I depatched my cablegram

No. 1001, in which I reported the day's developments.

morning of October 13, following the day of their
Directors' meeting and the departure of the Directors
for their respective capitals, that the three powers
had consumsated a further arrangement of intense interest
to Central Bankers. Dr. Jacobson had told me that M.
Beyen was considering the propriety of cabling the
Federal Reserve Bank of New York to the effect that
the B.I.S. thought the new move was good as far as it
went

- 19 -

went but that the B.I.S. would like to see it 60
further. In my cablegram I mentioned that M. Baumgartnor had told me that he considered the Paris press
reception of the now arrangement quite good, but that

there had been some political sniping, with the twentyfour hour feature the most vulnerable point. French
technical writers were generally appreciative of the
fact that this arrengement constituted a big forward
step. I quoted comments by French and British

financial writers.
You telephoned me at 3:15 p.m. on October 15.

You stated that you had two matters to take up with me.

First, my friends in switzerland had cabled to the
Federal Reserve Bank that they wanted to join the gold

pact. The Federal told them that this matter would
have to be taken up through the Secretary of the
Treasury. You had consulted with the Department of

State, and the latter was gied to approve your use
of me in conducting the necessary negotiations in

Europe. An instruction was to be sent out from the
Department of State to the Faris Embassy the same day

to this effect, but you desired to save a few hours by
telephoning Md. The American Minister in Switzerland
was not informed of the above facts, but I was to keep

him advised of any developments. I web not instructed
to consult with him. You stressed the point that you
desired to do business with the Minister of Finance,
that is, that angotiations would be between governments,
rather

- 20 rather than through their Central Banks.
The question had also been raised by Belgium.

Covernor Franck of the National Bank of Belgium had
cabled Governor Harrison of the Federal Reserve Bank

of New York as follows: "On reciprocal conditions
your cable we confirm our arrangement to sell gold to

United States our legal perity. Please transmit to
Treasury." You explained that the Federal Reserve
Bank of New York had, at your request, telegraphed
the text of your gold announcement of October 12 to

the Central Banks. As in the Swiss case, the Belgians
had been informed that they had to work through
Treasuries.

You were to advise the British of the above-

indicated interest of the Swiss and Belgian authori-

ties in joining the gold pact. You desired that I
inform Minister Auriol in the same sense. I was to
ask the French Minister of Finance whether he desired

to join with the United States in extending reciprocal
gold privileges to Belgium and Switzerland. I was to
ask whether France already had any arrangements with

these two countries. I was to make it clear that we
were being spontaneously considerate of France and

Great Britain in keeping them informed and in ascer-

taining their interest toward joining in this
extension of the pact.
You explained that Belgium was probably the only

country eligible to draw gold from us under the old
announcement

announcement of February 1, 1934. You did not want
to cancel this announcement until you had a new
arrangement with Belgium. You did desire, however,
that the arrangement of October 18 should supersade

that of February 1 and that the earlier arrangement
be cancelled. That 10, the reciprocal agreements
would be between Treasuries, and Central Banks would

act simply as agents of the Treasuries. It was not
essential that a country have a stabilization fund,
although it was perhaps ensier if they did have such
a fund to operate through in cooperation with the funds
of the United States and other countries. The Ambesaador

in Brussels was not being instructed as to my trip, but
I was to keep him informed.
You desired that the countries with which we
entered arrangements should be able to keep up their

own end, that is, support their own exchanges. You did
not want to take on any "lame ducks. You stressed
again that you wanted to cancel the 1934 arrangement

as soon as possible and have the October 12 the only
gold arrangement. You said again that the Department
of State was glad to have me act in the above-mentioned

capacity. You used the expression "through diplomatic
channels" two or three times when talking with me, to
the effect that negotiations should be through auch
channels and not through the Central Banks. I asked
you if you meant that the negotiations should by through
the usual channels of our Embassies in the respective
countries.

22 -

countries. You said no, but through the "MorgenthauCochran" diplomatic channels. You desired, however,

that I inform Ambassador Bullitt of this arrangement.
When you inquired if I had any questions, I asked
you whether I was to go to Brussels and Born. I thought
it would be better to discuss the matter in person. You
said I was the salesman of the idea and that I should
use my own judgment. Likewise, when I asked you if I
could make the appointments with the Ministers of
Finance through my Central Banking contacts, namely,
Governor Franck of the National Bank of Belgium and
President Bachmann of the Swiss National Bank, you said

you left this entirely to me. I told you that if I
made the trips I would send no cablegrama while absent
from Paris. You asked me to let you know whenever I

left Paris and to get in touch with you upon my
return.
At 6:45 p.m., October 15, I called on M. Baumgart-

ner at the Ministry of Finance. I told him of your
telephone call above-described in regard to the Swiss
and Belgians. M. Baumgartner said that he was sure
that the French would Le glad to associate themselves
with this move. He would have to speak with the Minister
of Finance and would telephone me at 10 o'clock the next
morning, October 16.
My cablegram No. 1008 of October 15, 5 p.m.,

described the exchange situation and quoted from the
London TIMES a report of Mr. Eden's speech, in which he
had

had referred very nicely to the tripartite arrangement
and its consequences.

As agreed, M. Baungartner telephoned me at 10

c'elock on the morning of October 16, but said that
the Minister of Finance had been ill and would be

late getting to the Ministry. M. Baungartner subaequently informed are that the Minister was quite in
accord with the arrangement for bringing the Belgians
and the Swiss into our group. At 10:45 on the morning
of October 16, I telephoned Governor Franck of the
National Bank of Belgium at Brussels and made an

appointment with him for 10 o'clock the next morning.
It was arranged that he would receive lae at the Bank
and would fix an hour for the Minister of Finance or

the latter's competent representative to meet with us.

I left this in Covernor Franck's hands, simply explaining that I must be in touch with the Ministry of Finance.
I also telephoned to President Bachmann of the Swiss
National Bank at Zurich at 11 a.m. and made en appointment to meet him on October 19 at 9:30, at the head

office of his Bank in Born. He was furthermore to
arrange an appointment for us with the Swiss Minister
of Finance for 11 B.M., October 19. I urged upon
President Bachmann the necessity for completing our

business on the one day, so that I could return to
Paris on Monday night.
On October 16 I had received the Department's

cablegran No. 405 of October 15, 18 noon, authorizing

- 26 as to establish contacts with the Swiss and Belgian

financial authorities and to negotiate with them in
your bohalf. Your message No. 406 of October 15,
5 p.m. gave the texts of the messages which had been
received by the Federal Reserve Bank at New York from
the Swiss National Bank and the Governor of the National
Bank of Belgium.

In my message No. 1010 of 4 p.m., October 16, I

let you know that I was proceeding to Brussels that
night and to Bern on Sunday evening. and that Ambassa-

dor Bullitt had telephoned Ambassador Morris at
Brussels and Minister Wilson at Bern, informing them
of-my plans.
Your cablegram No. 409 of October 16, 5 p.m.,

and your No. 410 of October 16, 6 p.m., giving the
texts of the Federal Reserve Bank's replies to the
National Bank of Belgium and the Swiss National Bank,

respectively, were not received in Paris until early
on the morning of October 17. I had arranged, however,
with an Embassy code clerk to be on duty quite early
that morning. The two messages were, therefore,
decoded and telephoned to me at my hotel in Brussels
before I went to the National Bank of Belgium to keep
my 10 o'clook appointment.
At 9:30 on Saturday morning I called on Ambassador

Morris and explained my trip to Belgium. The Ambasardor

suggested that before leaving Brussels I call on the
Prime Minister, M. Van Zeeland, whom I have known for
some

- 25 some years.

After receiving in Paris your instructions to
visit Belgium and switzerland for the purpose of
carrying or the negotiations under reference, I spent
some time going over all documents aveilable to me in

regard to effective monetary legislation of those
countries. Your instructions as to the form in which
some arrengement should be reached with the monetary

authorities of the two countries were quite general.
I worked out the idea that perhaps the best arrangement
would be for the compotent authorities to make a

declaration wherein they made clear the existing laws
affecting domestic and international gold dealings by
them, and indicated their competency and willingness

to effect gold dealings on a reciprocal basis with
your Tressury. Such a declaration should facilitate
your study of the eligibility of each country, since
this declaration would summarize pertinent legislation,
would indicate what type, if any, of stabilization or
equalization fund was in existence, and its method of
operation.

with the above plan in mind, I called on Governor
Franck of the Bank of Belgium at 10 o'clock on October
17. He had with him M. Joseph Warland, the General
Manager of the Belgian Treasury and Public Debt, and
My. Adolphe Baudewyns, Secretary of the National Bank

of Belgium. I referred to the exchange of eablegrams
between the National Bank of Belgium and the Federal
Reserve Bank of New York, and I indicated my purpose
in coming

26 -

in coming to Brussels. I had with me documents to

assist in explaining the American position and in
suggesting the lines along which the Belgian authori-

ties night clarify and set forth the Belgian position
with reapect to gold transactions. A declaration was
then drafted in French.
After completion of the draft, MM. Franek, Warland
and I went to the Ministry of Finance, where the

Minister, M. Henri de Man, received us. He read,
approved and signed the declaration as drafted, after
Governor Franck and I had explained to him the purpose

thereof. Governor Franck signed the declaration, after
the Minister had signed, and the Minister of Finance
then handed the document to me. M. de Van was then
kind enough to telephone Prime Minister Ven Zeeland,

with whom he arranged a twelve o'clock interview for
us. Governor Franck and I explained to the Prime
Minister the purpose of our visit, and he read the

declaration carefully. He found it quite satisfactory,
but he made the point that, relative to the second
paragraph of the first article of the declaration,
Belgium had had no provision of law which restricted

gold dealings to countries of the gold block and the
United States. After leaving the Prime Minister, I
returned with Governor Franck to the National Bank of
Belgium, where I translated the document from French
into English and hed it checked by secretary Haudewyns.
I lunched with Ambassador Morris and showed him
the

- 27 -

the declaration.
I returned to Paris on the evening of October 17.
on the following morning I filed at 10 a.m. my cablegram
No. 1018, providing you with the English translation of

to add on to our tripertite arrangement more than the
three countries of Belgium, Switzerland and the
Netherlands. Governor Franck thought we should stop

with these three and then work through the B.I.S. in
our gold dealings with any other countries. Governor
Franck had emphasized to me that he had plenty of gold

and was entirely willing to lose some of it. He said
he had already been giving gold to France, following
devaluation of the French franc.
You telephoned me at my home at 1:20 p.m. on

Sunday, October 18. I summarized to you the account

of my Belgien trip as set forth in my cablegram No.
1018 above-mentioned. I told you of my plans for the
Swiss trip. You seemed to approve of the idea of a
general declaration such as I told you I had obtained
from Belgium, leaving technical details to be worked
out

- 28 out directly with the Federal Reserve Bank of New York

after the preliminary agreements had been reached. In
this conversation I mentioned to you a news item from
the Netherlands in regard to possible adherence of the

Netherlanda to the tripartite agreement. I suggested
that I might possibly telephone Covernor Trip of the
Bank of the Netherlands if we got Switzerland lined

up, to give him at least the opportunity of bringing
the Netherlands into the arrangement before we made

any announcement of these two countries. You told me

to hold this question in abeyance until after I had
returned from Switzerland and had telephoned you my

report. You said that you wanted to be careful in
having the State Department approve every one of my

individual trips. You asked if the Belgiana appeared
to be in any great hurry for the completion of the
arrangement. I said I had told them I was going to
Switcerland and that I did not think they would mind
our postponing the announcement with respect to Belgium

until we might get both the Swiss and the Dutch into the
arrangement. You told me that the British would come in
with us entirely on these arrangements and were quite

willing for us "to write the ticket."
On the night of Sunday, October 18, I left Paris
for switzerland. Upon my arrival next morning I went
to my hotel and immediately called upon Minister Wilson,

who lives in the hotel, to explain the purpose of my
visit. At 9:30 I was received at the Swiss National
Bank

Bank by President Bachmann. When I came in the door,

he asked me, "shere is Mr. Morgenthau?" I told him
that you were in Washington insofer as I knew. When
I had called Professor Bachmann by telephone at

Zurieh to tell him that you wanted me to visit
Switzerland with the purpose of conferring with the
Minister of Finance, he simply misunderstood me to
say that you were coming. with President Bachmann
were MM. Schnyder and Weber, who are Vice President

and Third Member, respectively, of the Board of General
Managers of the Swiss National Bank, President Beehmenn

being the first ranking member.
I proceeded with the Swiss along the same lines I

had followed with the Belgians. That is, I referred
to the exchange of telegrams between them and the
Federal Reserve Bank of New York; explained the

American position; and suggested the lines of a

Swiss authorities to grant reciprocity to the United
States in gold deelings. Professor Bachmann raised

several technical points which he had set forth in his
cablegram of October 14 to the Federal Reserve Bank of

New York. He slac wanted the inclusion in this statement

of a provision for immunity of gold holdings. I told
him that technical points would have to be cleared up
with the

- 30 -

with the Federal Reserve at a later period and that
it would be preferable to omit any request for
immunity. I reminded him that when an embergo had

been placed upon gold exports from the United States,

holdings of Central Banks had in fact been exempt. I
did not think it possible, however, for any pledge to
be given by us, in acknowledgment of the Swiss declar-

ation, which could officially biad us to guarantee
future immunity.
At 11 o'clock Professor Bachmann and I went to

the Swiss Ministry of Finance, where Dr. Meyer, who
is Chief of the Federal Department of Finances and
Customs and was on that date President of the Swiss

Federal Council, received us. We explained the idea

of gold reciprocity, and Dr. Meyer indicated his entire
approval of and sympathy with the plan for SwissAmerican cooperation. He explained that under Swiss

practice, it would be necessary, however, for him to
obtain from his colleagues on the Swiss Federal Council
approval of the proposed declaration before he could

sign it.
President Bachmann and I then returned to the

Bank, where a draft declaration was drawn up. My
Swiss friends were most thorough and pains-taking in

their efforts. The draft was typed out in French
and German, while I lunched with the three officers of
the Bank. The draft was revised after lunch and I
made on English translation thereof, which M. Schnyder
checked.

checked. The above tasks occupied our entire afternoon.

Just before dinner I called on Minister Wilson and

showed him the declaration. I left Born that night
and reached Paris the next aorning. My emblogram No.

1021, filed at 11 a.m. on October 20, reported my
negotiations and contained the English translation of

the Swiss declaration. In this message I explained
to you that I had cautioned the Swiss to guard the
negotiations as confidential, sa I had the Belgians.
The Swiss, in turn, requested that the contents of
their declaration be kept confidential and be not
published. Furthermore, I let you know that several
days would have to elapse before the definite approval
of the Federal Council could be obtained.
At 4:30 p.m., October 20, I reached you by telephone
and summarized to you my cablegram No. 1021, reporting

You said that you were considering the idea of limiting
operations by countries having no stabilization funds,
such as Helgium, to a quots, sey 10 million dollars
for any one day, lest some other countries might operate
through the country in question. You asked my idea on

this. My initial reaction was that each a restriction
should not be imposed, it being my feeling that we could
efford to be generous rather than otherwise in yielding
gold.

gold.

In my cablegres No. 1028, dated October 21, 6 p.m.,
I let you know that I had called on M. Baumgartner at

the Ministry of Finance, at 5 o'clock, and hed
acqueinted him with the results of my tripe to Belgium
and Switzerland. I learned that the French were
entirely ready to move along with us in making
reciprocal arrangements with the Belgians and the
Swiss in regard to gold transactions. M. Baungartner
asked that the French be given time to complete toohnicel arrangements with such countries as the United
States might consummate arrangements with before we

issued any public announcements in regard thereto. The
French would desire to make simultaneous announcements.

M. Baungartner hoped that the Netherlands would join in
the arrangement in order that a complete picture of

cooperation and soliderity between the six important
financial nations sight be achieved.
On the morning of October 22, I received your
cablegram No. 481 of October 21, 5 P.M., raising a

question in regard to a spread in the Swiss buying and

selling prices of gold, so set forth in the Swiss declaration which I had gabled you. Yn my message No. 1034,

dated October 22, 2 p.m., I gave you my explanation on

this point. In this arme telegram, I told you of a
letter, dated the 21st, which I had received from
President Bachmenn, who said that the Swiss Federal

Council would pass on the question of the Swiss
declaration on October 23, and that the Board of General
Managers

Managers of the Swiss National Bank would then have

to submit the question for approval to their Board of
Delegates on October 27.

The Paris exchange market was quite hectic on

October 22 with the frane heavily under pressure, due
to domestic political concern over the Radical Socialist

convention at Biarritz and to international approhensions
lest the Little Entente States follow Belgium's example
and declare their neutrality. In my message No. 1035
of 5 p.m., I gave you a summary of the day's operations,
including remarks of M. Cariguel thereon.
on the morning of October 23, I received your
cablegram No. 423 of October 22, 6 P.M., asking me to
inform the Belgian and Swiss authorities that, owing
to the extreme pressure of business and of the elections,
you would not be able to give the necessary consideration
to negotiations for gold arrangements before the following
week. I immediately addressed letters to MM. Franck and
Bachmann conveying this information. I telephoned M.
Baungartner to let him know of your message, and also

He said that it was possible that President Trip of the
Netherlands Bask night be visiting Paris the next week.
Incidentally, this visit never transpired.
You telephoned me at 4:15 p.m. on Monday, October
26.

- 34

26. You stated that you were satisfied with the
declaration which I had received from the Swiss on
my trip to Bern, and with the arrangement contemplated

therein. You were not satisfied, however, insofar as
Belgium was concerned. The declaration which I had

obtained from the Belgians did not let you feel that
you were doing business with the Treasury. You said
that the Treasury could designate the National Bank of
Belgium as its fiscal agent, or that the King of the
Belgians could reestablish the stabilization fund if
he desired. You would prefer to see the resstablishmont of the stabilization fund, but you did not insist
thereon. You told me to visit Brussels again and see
that the arrangement was strictly between Governments.

If Belgium did not see fit to come in on our terms we
should go ahead with our arrangements with Switzerland.
When I mentioned that no word had yet been received

from the Netherlands, you said that you had no objection

to the French "building a fire under them" if they
desired. You told me to report promptly on my Brussels
trip when I returned to Paris.
In the afternoon of October 26 I talked by
telephone with M. Baungartner. I mentioned our position
with respect to the Netherlands. M. Baumgartner said
he or M. Fournier would telephone Dr. Trip to the
effect that the Swiss and Belgians had approached us,

that I had visited their two countries, and that I was
going to Brussels again on Tuesday evening.

- 35 At 4:30 on October 27, M. Baungartner telephoned
me that M. Fournier had telephoned the Netherlands

Bank at Azsterdam but had learned that President Trip
was absent from the city. Undergovernor Fournier had

agreed to oall President Trip when the latter might
be beck in Amsterdam, and M. Baungartner promised to

let me know the results of the conversation when I
returned from Brussels.
In ay cablegram No. 1053 of October 27, 5 p.m.,
I continued my observations of the preceding few days
upon the factors which were working against benefits of

above plans, I left Paris on the evening of Tuesday,
October 27. When you had talked by telephone with me

on the afternoon of October 26, you had asked that I
go up to Brussels that same evening. I told you that

it was too late for me to telephone to Brussel for
appointments and to catch the train which left Paris
at 6:10 p.m. 1 did proceed, however, to telephone
Governor Franck at once on Monday evening and made
an appointment for Wednesday morning.

No further instructions from you as to the specific
representations which I should make at Brussels arrived

for me before I left Paris or were transmitted to me
at Brussels before the hour of my appointment with the
National

- 36 National Bank of Belgium. I was, accordingly, free
to use my own judgment in endeavoring to obtain the
ends which I thought you desired. When I was received
by Governor Frenck and Secretary Baudewyns of the

Belgian National Bank, I indicated to them your wishes.
Governor Franck again went over the Belgian situation

with me. I was definitely informed that the Belgione
had no intention of reestablishing a stabilization
fund. Realizing, therefore, that there was no likelihood of a change in the basic Belgian monetary set-up,
as pictured in the declaration which I had procured

at Brussels on October 17, I sought an additional

statement on the part of the Minister of Finance,
which might meet your requirements. Ny instinct
was to make no arrangement, even of a confidential
character, whereby the Belgian Government might be

placed in the position, before the Belgien public, of
seeking to contravene the laws and practices which fix
the relations between the Government and the Central

Bank. Governor Franck and I drew up a letter with

the above points in mind. le telephoned the dreft
text to Minister of Finance de Man, who assented to

the terms, but requested that I learn from you whether
the draft would meet your requirement before he be
asked to sign the document.

I went to our Embassy in Brussels, where I

explained the situation fully to Ambassador Morris

and put in a call to telk with you at 2:30 p.m. I
then

then went back to the National Bank of Belgium, where
I attended a large monthly luncheon of the Directors
of the Bank, at which a number of prominent outside

officials were present.
After the luncheon I returned to the Subsesy and

apoke with you. I read you the text, in English, of
the letter which had been drafted. You could not give
an immediate answer 65 to whether this would acceptably

solve the question. You asked no to eable the text,
together with ay comments, Consequently, the draft
was not submitted to the Minister of Finance for
signature at a 4 o'clock appointment which had been
arranged for this purpose.

Before taking the 4 o'clock train from Brussels
to Paris, I again spoke with Covernor Frenck, and it
was understood that I should communicate further with

Brussels if you desired that the letter be completed.
It was agreeable to the Belgians that this letter be
addressed to you and be sent to me for transmission

to you. It will be recelled that I raised this point
with you on the telephone, since the Belgiana were

uncertain as to whether the letter should be transmitted
in this fashion, or through our Embassy in Brussols, or
be simply a note addressed to me. I told Ambeasador

Horris of all of my conversations, and be was entirely

agreeable to the idea of the letter being sent to you,
through me, if it night subsequently be signed. In our
conversation by telephone, you stressed the point that
any actual arrangements which you made with foreign
countries

- 38 countries in regard to reciprocal gold deelings would
have to be made public.

Upon my arrival in Paris on the evening of October
se, I came to the Embassy and despatched at 10 p.m.
my cablegram No. 1061, which I had prepared on the

train ooming from Brussels. In this, I gave you the
text of the Belgian draft letter, and commented freely
thereon. I had done everything I thought possible at
Brussels to ensure that our reciprocal gold transactions
be of a governmental character. You will recell that
on my first visit to Brussels I had procured the
signature of the Minister of Finance to the declaration,
along with that of the Governor of the Central Bank,
and had also obtained the oral approval of the Prime
Minister of the country to the declaration. In drafting the proposed letter, on the second trip, I suggested
the reference therein to the fact that the National Bank
of Belgium acted as the fiscal agent of the Treasury.
In my cablegram I made the point, however, that since
gold which would be ceded to you from Belgium was

actually the property of the National Bank of Belgium,

the letter would not, in my opinion, be acting as
fiscal agent of the Treasury in such transactions. My
whole purpose had been to achieve an understanding as

completely in accord with your desires as possible,
but at the same time to make known to you attenCant

facts and circumstances, and to take every presaution

to prevent any eventual criticism of our arrangement.

- so a

At 3:15 P.M. on October 29, I telephoned President
Bachmenn at Zurich to learn what progress was being

made with the Swiss declaration. He told me that he
had mailed to me a letter, accompanied by copies of
a text of the Swiss declaration which had been approved
by the Board of Delegates of his Bank at a meeting hold
on October 28, and was to be passed upon by the Swiss

Federal Council on October 30. He mentioned to me a
few changes which had been made in the text as

originally drafted when I visited Bern.
You telephoned me at 5 D.M. on October 29. I gave
you the substance of my conversation with President

Bachmann. We discussed the results of my Belgian trip.
You and Dr. Feis asked me for procise information as

to the position of the Belgiens with respect to
publicity of any arrangements which they made with us.

You referred to the need of letting your public know
what you were doing, particularly since you faced the
necessity of having legislation passed to give

authority for the continuation of the stabilization
Fund after January 31, 1937. You were fully aware of
the objections which Central Banks might bring up to
the plan which you had decided upon, with the President's

approval, for arranging gold reciprocity.
I mentioned to you that President Trip of the
Hotherlands Bank had telephoned me on the preceding

afternoon from Amsterdan indicating the interest of

Premier Colijn and himself in inquizing in regard to
the formalities with respect to entering a reciprocal
gold

40 -

gold arrangement with the United States. You told

me that you preferred that I see President Trip in
Amsterdam, rather than reserve our interview for our
next meeting at Basel on November 9. You stated,

however, that your hands were full for the present,
and that you would give me specific instructions
later.
In my cablegram No. 1063 of October 30, 12 noon,

I confirmed my report of my conversation with President

Trip. I also let you know that at 10:45 on the morning
of October 30, M. Baungartner had telephoned to inquire

about the present status of our negotiations. M.
Bausgartner strongly advanced the opinion that no
announcement should be made with respect to switzerland

or Belgium until we might see whether the Netherlands

could also be brought into the agreement, and until
time was then given for France and England to agree
upon announcements to ba issued simultaneously with
the American announcement. When Dr. Trip had telephoned

me at 3:30 on the afternoon of October 29, he said that

he had not gotten into touch with us earlier, not
because he had not wanted to cooperate fully but that
he had desired to see how conditions eight develop on

his own market following the departure of the florin
from the gold standard. I told him of the talks which
I had had with the Belgien and Swiss Treasuries. it
was understood that I could not ask for an appointment

to see Promier Colijn and himself until I might submit
the matter

the matter to you and received your instructions.
I called President Trip back at 9:45 a.m.,
October 30, and told him that I could not at that time
indicate a date upon which I might visit him at Amaterdam. He thought it much better to meet in the
Netherlands, where everything could be settled all at
once, than to endeavor to make any arrengements at

Basel. He said that he was already working on a
formula for transactions with the Federal Reserve Bank
at New York, which he would mail to no. He had confirmed
that Premier Colijn would be glad to receive me whenever
I might visit the Netherlands. He mentioned that
Governor Labeyrie had telephoned him the preceding

afternoon, shortly after he, President Trip, had apoken
with me in regard to possible arrangements with the

United States. He made the point very clearly that
he had thus taken the matter up with us on his own

initistive and prior to his receiving any suggestion
from the French.
In my cablegram No. 1064, datos October 30, 3 p.m.,
I gave you the amendments which had been made in the

Swiss declaration, I having received on that morning
the letter from President Bachmann, dated October 29,

sign the declaration as of October 28.
You

You telephoned me at my home at 2 P.M. on

Sunday, November 1. I let you know the developments

of the week-end, including the receipt of a letter
from President Bachmann confirming his telephone call

and telegram, and informing me that the signed 3wiss

declaration should reach me shortly. I told you
furthermore, that M. Bachmenn had raised the question

as to whether Switzerland should adhere to the tripartite declaration of September 25 in the same manner
that the Belgian Government had adhered.

British and French Treasurios in the event that
additions might be made to the countries eligible
to reciprocal gold transactions. In my cablegram
No. 1070, dated November 2, 10 a.m., I confirmed

my understanding of certain points which we discussed

by telephone the preceding afternoon. I included in
this cablegram certain reasons which, in my opinion,
made it

made it important to extend the tripartite agreement

as early as possible. I also told you that I had
telephoned President Trip, who would receive me at

the Bank of the Netherlands the following morning
and would make an appointment with Premier Colijn.

I was, therefore, leaving Paris on Monday noon for
Amsterdam and should be back in Paris on Wednesday
morning.

On the morning of Tuesday, November 3, I called

at the Bank of the Netherlands at 9:45 a.m., and was

received by President Trip. We were later joined by
the ranking Director, M. Beaufort, and the Secretary
of the Bank, M. de Jong. Before leeving Paris I had
received the proceding forenoon a letter dated October
30, with which President Trip had enclosed a memorandum

which he had drawn up suggesting the lines along which

gold transactions might be carried out between his
Bank and the Federal Reserve Bank. I had studied these
on my way to Amsterdam with the view to having in mind

a draft declaration which would be similar to those
declarations already obtained from the Belgians and
the Swiss, and would at the same time include enough

of Dr. Trip's suggestions to satisfy the Dutch. with
Dr. Trip's memorandum and the Swiss and Belgian

Immediately afterwards we read over the typed copy
and made a few corrections therein.

At 2:45 President Trip and I took the train to
The Hague, where Premier Colijn, with Minister of
Finance Oud present in his office, received us at
4 p.m. I explained to MM. Colijn and Oud the procedure which we were following in our negotiations

with the countries which had indicated an interest
in having gold dealings with us on a reciprocal basis,
and President Trip explained to them the draft document.
MM. Colijn and Cud approved the document, but it was

agreed it should not be signed until I might ascertain

from you the acceptability of the terms thereof. It
was understood that MM. Oud and Trip would be the

officials to sign. After leaving the Prime Minister,
Dr. Trip went with me to call upon Minister Romet,
who is a good friend of his, but we found him out of

town. We hurried on, therefore, to the railway station,
where I caught the train for Paris.
In my enblegram No. 1075, sont from Paris at 10

a.m. on November 4, I gave you the text of the Dutch

draft declaration and also transmitted certain opinions
which the Detch officials had volunteered to me. I
particularly mentioned Butch concern over the French
situation because of the apparent tendency of the French
public to continue to doubt the Government and because

of the lack of prospect for a strong, confidenceinspiring Government to come into power. I added that
President

45President Trip felt that the American legislation
providing for a Stabilization Fund and a further out
in the dollar had an important merit internationally
in that this legislasion constitutes a balance to
steady sterling, with the relationship between the
dollar and sterling now more than ever having an

important influence on the currencies of the world.
In a second telegram, No. 1076, sent a 1 p.m.

on November 4, I told you of the receipt of the Swiss
declaration, dated October 28, bearing the signatures
of MM. Meyer, Bachmann and Weber. I also let you

know that there had been a leak to the press from
Switzerland as to the Swiss signing a declaration in
regard to the Anglo-Franco-American monetary arrange-

ment. I also mentioned that M. Baungartner had
telephoned me as to the French unahppiness over this
leak, which apparently came from the Swiss Federal

Council. I told M. Baumgartner at this time of the
results of my Dutch trip, and he said Minister Auriol
was anxiously awaiting our decision on the three
countries.

I spoke with you at 8:30 p.m. on November 4. I
told you the substance of my two cablegrams sent during
the day, above-summarized, and urged the importance of

terminating arrangements for the addition of the three
countries by Sunday or Monday. I was anxious that this
might be achieved before the Central Bank Governors met

at Basel. You stated that you were enxious to accomplish
the addition

- 46 the addition of the three countries, on a three-sided
arrangement with France and Great Britain, but you
were afraid this could not be arranged in such a short
time.
In my cablegram No. 1080, dated November 5, 4 D.M.,

I reported the gratification expressed by the Europeen
financial press over President Roosevelt's reelection
and its consequent optimism over the prospect of
continuing monetary cooperation, following up the

tripartite agreement. I also let you know that I
had been able to inform Minister Emmet fully of my

you quoted the draft of a proposed statement to cover

the release of gold for export, not only to the countries
then under discussion, the Netherlands, Switzerland and
Belgium, but also to France and England. In my cablegram No. 1085, dated November 6, 5 P.M., I reported

that, in accordance with your telographic instructions,
I had loft with M. Bauagartner at the Ministry of
Finance a copy of the proposed statement, and that M.
Baungartner had promised to discues the matter with

Minister Auriol and to provide me the following day,
if possible, with a memorandum setting forth such
expent as the French Ministry of Finance might care

to give me upon the draft declaration.
when

When I left the above-mentioned document with
M. Baumgertner at 3:30 p.m. on November 6, he could

not grasp the exact purpose thereof. He thought a
new declaration, especially superseding the one of
October 13, if issued now, would only confuse people.

He thought it better to hurry up with the addition of

the three countries to the original declaration. If
necessary, we could make some amendment later. M.

Baungertner was quite willing to accept for the
Ministry of Finance the declarations which I had
obtained from the three countries, he stating that
France would require nothing further as a basis for
granting reciprocal gold treatment to the countries
involved. M. Saungartner admitted that, as far as
France's present status was concerned, this now

promised to discuss the matter with Minister Auriol
and to call me back on Saturday morning, when he would
endenvor to give me a memorandum on the subject.

At noon on November 7, I visited M. Baungartner.

He had not been able to see the Minister of Finance

since my call on the preceding afternoon, due to
M. Auriol's being engaged on parliamentary matters.
M. Banugartner hed, however, drawn up an informal

letter

40 -

letter, addressed to me, in which he expressed his
personal views. I had asked that the views of the

French officials be set down in writing in order

that there would be ne possibility of the slightest
misunderstanding in the premises. I asked M. Saungartner whether he had any objection to my cabling

his views to you. He said that he had none, provided
that I characterized them as his own views.
In my cablegram No. 1092, sent at 2 p.m. on
November 7, I provided you with a translation of M.

Baumgartner's letter, giving three reasons why he
thought your proposed declaration might cause ineonveniences. First, because the impression might be
gained that the October statement was being reversed
for some reason that might not be clear to the French
public; second, because he thought that Helgiw could

not subscribe to the declaration as drafted; and, third,
because difficulty or emberrasament might be experienced

if France eventually returned to the normal system of
the gold standard.

On the night of saturday, November 7, I left for
Basel, where the B.I.S. Directors were having their
monthly meetings on Sunday the eighth and Monday the

ninth. While at Basel I gave an oral reply to
President Bachmann of the Swiss National Bank, who

had written me under date of November 5 to inquire

whether or not his Bank was at liberty to approach the
Federal Reserve Bank of New York in regard to making
arrangements

- 49 arrengements as to future gold and exchange operations.

Since the declaration which I had received in your
behalf from the Swiss authorities had not yet been
definitely approved by you, my answer to President
Bachmann was necessarily negative.

Upon my return from Basel on the morning of
November 10, I filed my cablegram No. 1096 at 10

latter might have proper facilities for continuing to
help the smaller European Central Banks to rebuild

their gold supplies. I geve you the views as expressed
by Governor Norman upon the gold movement to the United

States, which had been continuing after the consumation

of the tripartite monetary agreement. The Governor
insisted that the Bank of England had all the gold

that it needed or could use. I mentioned the skepticism
of some of my friends in regard to the French making
devaluation a success. In a second telegram, No. 1098,
sent at 5 P.M. on November 10, I informed you of the
nervous condition of the French exchange market and

reported that there was even some gossip as to the

possibility of exchange control.
After returning from Basel I had telephoned M.

Baungartner at the Ministry of Finance to see if he
could

- 50 could give me the views of the Minister of Finance
upon your draft declaration, which M. Bauggertner

had thought would be possible on that date, as indicated
in the final sentence of my No. 1092, November 7, 2 p.m.
M. Baungartner told me that Minister Auriol shared

his views on the statements, but that the matter was

morning. He asked me to call him at 12:15 on that day.
He said that he had learned that the British were
apparently disposed to interpret your intended state-

ment in a manner different from the interpretation
which he and the French Minister of Finance had placed

upon it. I told you of my call and the postponement
of a decision until Thursday, November 12, in my
cablegram No. 1100, November 10, 7 p.m.

At noon on November 10, Miss Willis, Secretary of
the American laboasy at Brussels, telephoned me that
the subasay had received an envelope from the Belgian

Minister of Finance for me, and ahe inquired as to

question, and in the inner cover, addressed to me, I
found an original letter, dated November 9, 1936,
signed

I had had no further conversation with any one upon this
subject, and when I talked on a subsequent occasion with
the Embeasy at Brussels, I found that no one there had
been in communication with the Belgian authorities upon
this subject. The letter, presumably, was signed and
despatched by the Minister of Finance upon his own

initiative.
I called on M. Baumgartner at the Ministry of
Finance at 12:15 on November 12. He told me that he
had received from his Acting Financial Attaché in

London, M. F. Le Horey, a letter to the effect that
London had interpreted your proposed declaration

differently from Paris. The British officials thought
that the new declaration was to facilitate and not to
hinder Belgium's cooperation. I was happy to be able
to show M. Bauagertner the signed Belgian confidential

letter, which I had received just before going to the
French

- 52 -

French Ministry. He admitted that this evidently
indicated that Belgium would be disposed, confiden-

tially, to give a wide interpretation to the manner
in which the Bank of Belgium aoted as "fiscal agent
of the Ministry of Finance, even though it actually
was not fiscal agent but "principal" in gold dealings.
He thought France might now yield, seeing that Helgium

was taken care of, but he insisted that his technical
objections, as he had communicated them to me and as

I had cabled them to you, were still well founded.
He told me that Minister Auriol was "confused" over
this new scheme. M. Baumgartner said that he would

the British had given you their reaction to your
proposed statement, since the letter from M. Le Norey
was accompanied by a proposed draft of a British
declaration, dated November 9, to be issued in
welcoming the extension by the United States Treesury

of the reciprooal gold arrangements to Belgium,
Switzerland and possibly the Netherlands. Although

M. Baungartner promised to call me back later in the
day. I did not hear from him; and when I telephoned

the Ministry of Finance at 6:45 p.m., I found that he
had left.
At 10 a.m. on November 13 I telephoned M.
Baungartnar

- 53 Baungertner that I was anzious to wire to you on that
day the French response to your proposed declaration.
He said that he would see the Minister during the
morning and asked me to call at 12:15. At the
prescribed hour, 1 celled upon him and then returned

to the Embassy, where I dictated a report of our
conversation and had it eoded under serial No. 1106,

dated 4 p.m. At 4:15, I put in a long-distance call
for you in order that you might know the French decision.
At 4:55 I WES informed that you were absent until the

following week but that if the matter was very urgent
you could be found. M. Baumgartner telephoned me at

5 o'clock to say that he had just learned that the
British had replied to you, giving their approval
to the proposed declaration. Your message No. 456,
sent rush at 10 a.m. on November 15, requesting that
a definite answer from the French on the matter of your
proposal be sent to reach Washington not later than
Saturday morning, was received after my cable No. 1106
of 4 p.m. had been despatched.

In my cablegram under reference, I told you that
while Minister Auriol endorsed the views of his

technical assistant, M. Baumgartner, as set forth in
my No. 1092 of November 7, 2 p.m., I had procured the

oral agreement of the French Minister of Finance to
your proposed statement, as quoted in your No. 445,

November 5, 5 p.m., with one condition. MM. Auriol

and Baungartner, after learning of the Belgian letter
and of

- 54 -

and of the British willingness to give a very broad
interpretation to the idea of "fiscal agent," did not
desire to interpose objections to the issuence of the

proposed
condition
was, when

issued, be some to that

there no rupture of the tripartite

agreement. they desired that the be

made
had
original but that

to for
countries now found

dealings. my

the that however, had three there agreement, American had the been In That original three should that eublegram is, been declaration. powers parties your reporting eligible certain wording declaration not Their original reciprocal revised the additional to one indicate French be might their point added gold be

decision, I quoted a letter from the British Treasury
to the French Financial Attaché at London in regard to
the proposed communiqué by the Chancellor of the
Exchequer.

You telephoned me at my home at 9 o'clock on the

evening of November 13. You referred to the letter

which I had received for you from the Minister of
Finance of Belgium, and you requested that I mail

this at once to you. I told you of my eablegram
reporting the French decision. You felt that you
could meet their worry with respect to the wording of
the release on the one point under reference. The
question was discussed as to whether we could at
once mail to the three prospective members, Belgium,

switzerland and the Netherlands, the text of the
proposed

- 55 proposed statement and give them a week to agree thereto.

I thought it might be necessary to visit the countries
personally when the time came. I suggested that you

provide 100, for further transmission, with the text
of any oral statements which you planned to make at

the time your formal declaration was issued. You told
me that you were seeking on Sunday the President's

approval to your proposed statement and that I should

hear from you on Monday. You were particularly interested to know what had moved the French to consent to

sure to see him. In two telegrams sent on November 14
I mentioned the press rumors that the Netherlands was

considering joining the tripartite gold arrangement
and that Swiss adherence thereto was considered

practically an accomplished fact. I mentioned these
rumors as reason for heate in our concluding arrangements with the three countries under consideration and
in issuing appropriate announcements. I told you that
strengthening of the tripartite agreement would be
most welcome to Frence, considering the bitter parliamentary fight which the Government was having on its

budgetary and financial policies.
In my

- 56 In my cablegram No. 1119, sent at 6 p.m. on
November 16, I mentioned the attention which the

that night, which was intended to supplement, and not
to denounce, the statement of October 13, and that you
were anxious to get complete adherence to this new

declaration in order that it might be announced by
you at 4 p.m. on Monday, November 28. That is, one
week from the date on which you spoke to me. It was
understood that I was to take no action on the declaration which you were cabling me until you might telephone

or wire BG further to the effect that the President,
whom you were seeing the next day, hed given his

definite approval thereto.
on the morning of November 17, I received your
rush cablegram No. 462, sent at 12 midnight, November

16, wherein the draft declaration was incorporated.
You telephoned me at 8:40 p.m. on November 17.

You told me that the President had approved your draft
statement as embodied in the cablegram which you had

sent to me the preceding night. : told you that
Minister Auriol was out of town, but that I was seeing
M. Baungartner at 4:15, and that the letter would
telephone to Toulouse in an effort to obtain M. Auriol's
approval

- 57 -

approval to your new declaration. I was sure that
I could procure the French adherence to your new plan,

especially since it embodied the idea of not cancelling
the declaration of October 13. I agreed that this
statement constituted an improvement over the preceding

draft.

You outlined to me the schedule which you desired

to be followed. You said that you would like to have
the Swiss and the Dutch get out a release on Sunday

night, November 22, for publication in their morning
papers of November 23, indicating the adherence of

those Governments to the tripartite agreement of
September 25. These declarations of adherence should
be phrased similarly to that which Belgium had made
on September 26, and should be transmitted through

the respective Foreign Offices to the three powers.
The Department of State should receive such telegrama

not later than Sunday, so that the statements could
appear in American papers on Monday morning. In

answer to your inquiry as to whether I had a copy of

the Belgian declaration, I told you that I had a press
copy thereof, and that I would get an official copy of
the complete statement from the French Ministry of

Finance for the guidance, if necessary, of Switzerland
and the Nethorland
You stated that the United States, France and

Great Britain would, according to your achedule, give
out on the night of Monday, November 23, releases for
publication

- 58 publication on the morning of Tuesday, November 24.

Your statement in regard to your new policy would be

issued at that time. I asked 1f you desired that you
receive, prior to their issuance, the texts of the
statements which the European countries were going to

give out. You thought this was not necessary with
respect to the statements of adherence to the September
25 agreement on the part of Switzerland and the

Netherlands, since they were simply to follow the

Belgian text, but you did desire, if at all possible,
to have any advance copies of the announcements which

the countries planned to make with respect to the
reciprocal gold arrangements which were being consummated.

It was agreed that I should cable you on the
evening of November 17 the results of the interview
which I was to have at that time with the French

Governments. I told you that I thought it might be
necessary to visit the officials in the three countries,
particularly the Belgiane, who were most vitelly coneerned with the new declaration, and the Dutch, who

had not yet signed their original technical declaration.
Furthermore, it would be quite difficult to make the
Swiss understand over the telephone just what wes
involved

- 59 -

involved, and to procure an official swine
to the tripartite declaration of September 29, Mass
the Minister for Foreign Affairs would have so the
approached on this subject by my two contacts, the
Minister of Finance and the President of the intos

National Bank. You said that the inerleas ment in regard to the addition of the new countries
would be very simple, in the same manner as the

announcement was made as to the eligibility of
and England. At my suggestion you agreed to cable an
the text of such a brief announcement.
In my cablegres No. 1121, sent at 7 p.m. on

November 17, I told you that I had at 5 o'clock that
afternoon submitted to M. Heungartner at the Ministry
of Finance the proposels contained in your No. 468 of
November 16, 12 midnight, which, according to cablegrea

No. 463 of November 17, 2 p.m., could be definitely

taken as the basis for negotiations. I told you that
M. Baumgartner had not been able to get into touch with
Minister of Finance Auriol, who was coming by motor car

from Toulouse to Paris. My friend was confident that
the Minister would approve the statement and arrangements described in your cablegram, and he promised to
give as definite word before noon on Wednesday.
Under cover of a note dated November 17, 1936,

I bailed you in our diplomatic pouch the original text
of the communication addressed to you under date of

November 9, 1936, by the Minister of Finance of
Belgium.

- 60 Belgium.

M. Baumgartner telephoned me at 10:30 on the

morning of November 18 that Minister of Finance Auriel
had returned to Paris and had found himself in complete
agreement with the proposals as set forth in your
cablegram No. 462 of November 16, 12 midnight. I
gave you this information in my cablegram No. 1123,
sent at 12 noon, November 18. I informed M. Baungartner

of the contemplated form of press release quoted in
the Department's No. 465 of November 17, 4 p.m.

I put in a long-distance call for you and obtained
communication with you at 2:45 p.m. on November 18. I

gave you the information in regard to the French approval,

which I had sent in my eablegram. I told you that I
should have to leave for Belgium that night if it was
desired to finish arrangements by Sunday. I told you
that I could attend to the negotiations in Brussela the
following day and could telephone or wire you from there

the results. You said to telephone you, if possible,
and confirm by cable, and for me not to hesitate to
use the telephone freely. It was understood that I
could not make any arrengements with the Dutch or Swiss

officials until I had procured the necessary approval
of the Helgian officials to the new draft statement.
If such approval was obtained, however, I was to
endeavor to effect the necessary arrangements in the
Motherlands on Friday and In Switzerland on Saturday.
You were agreeable to my plans and told me to leave
Paris

- 61 -

If necessary, before seeing the officials there.
At 3:45 on the asme afternoon, November 18, you

telephoned me that you had heard from the British and

that your statement was found entirely agreeable to
the Chancellor of the Exchequer, provided it was

acceptable to the Belgians. I was, therefore, to go
on to Belgium that night and to keep you informed

currently as to the results of my conversations.
Consequently, I telephoned at once, at 4 p.m., to
Secretary Beudewyns of the National Bank of Belgium
(Governor Franck was on e holiday in Egypt) and arranged

to see him on the following morning at 9:45. He was to
take me to see Minister of Finance de Man. At 5 o'clock
I telephoned M. Baungartner, and be said that it was
also his understanding that the British were entirely
in agreement with the French and Americans on the

22, to learn the complete results of the trip and to
plan for the necessary French announcements.

Consequently, I left Paris at 6:10 on the evening
of

- 62 of November 18 for Brussels. At 9:15 on the morning
of November 19, I telephoned Ambassador Morris to let

him know that I was in Brussels and to inform him of
my plane. At 9:45 I wont to the National Bank of
Belgium, where I was received by Secretary Baudewyne

and M. Mahieu, a Manager of the National Bank of Belgium

who was acting in the place of Governor Frenck during

the latter's absence in Egypt. I showed these two
officials a draft of your proposed statement and
informed then that the French Ministry of Finance had
considered your plan acceptable, as had the British,
subject to Belgium's finding the arrangements and

declarations agreeable. I told them of the plan to
obtain the adherence of the Netherlands and Switzerland

to the tripartite declaration, and then to add these
two countries, along with Belgium, to those nations
entitled to gold reciprocal treatment. I made the
point, however, that I could not proceed further with
this plan unleas Belgium's approval in the premises
could be obtained at once. I also made the point that
this now declaration had been drawn up specifically to
meet the Belgian situation. The two officers of the
Belgian National Bank saked to be permitted to study
the documents. I was to return at noon to the Bank,

and from there we were to proceed to the Ministry of
Finance to confer with M. de Man.
Upon leaving the Bank at 10:30, I proceeded to the
Embassy, where I explained developments to Ambessador
Morris.

- 63 -

Morris. I called back at the Bank at 13 noon, and
MM. Baudewyn and Mahieu accompanied me to the Ministry

of Finance, where we were net by M. Warland, the

General Manager of the Treasury. Before we entered

the private office of the Minister of Finance, I
learned that the Minister had signed and had despatched
his letter of November 9 to you without the knowledge

of any of his technical advisers or of the officials
of the National Bank. This point came out when, as
we were about to go into M. de Man's office, M. Warland
told see he was opposed to the idea of the Government's

giving such a statement, guaranteeing the operations
of the National Bank of Belgium, as had been envianged

in the draft letter which had been drewn up when I had
been last in Brussels. M. Baudewyna laughingly remarked to M. Werland that his objections were too late
since the Minister had already signed the necessary

letter.
To Minister de Man I explained the situation, as

I had earlier in the morning at the National Bank of
Belgium. He understood that your proposed declaration
was to supplement that of October 13 and he took no

exception to the cancellation of your statement of
January 31, 1934. He Indicated definitely that he
stood by and confirmed the original Belgian declaration
of October 17, as well as his letter of November 9.
Fis one question was in regard to the manner in which
you

- 64 you might find it necessery to explain the manner in
which Belgium had been fitted into the reciprocal
arrangements. When we were discussing this point, M.
de Man volunteered some phrases which I took down in

his presence. If this point could be cleared up, he
was quite agreeable to enter the arrangement. In order
to expedite the matter, I told the Minister of Finance
that I would telephone you early in the afternoon and
hoped that I could give him definite assurance on his
point in the course of the day.
I proceeded from the Ministry of Finance to the
Embassy, where I placed a call for you for 2:30 p.m.,
and then lunched with the Ambassador. When our cell
come through, I summarized to you my conversations of
the day and emphasized the one point of possible

difficulty. You told me to inform the Belgian Minister
of Finance that you now understood exactly what the
Belgian situation was and that you would do your very
best to avoid any emberrassment insofar as the American
press was concerned.

At the conclusion of our conversation, I called
the National Bank of Belgium, where I spoke to Secretary
Baudewyna by telephone and asked him to communicate your

65 -

explained to the Belgiana the proposed schedule for

press releases. I had left them copies of all available documents, and had promised to communicate with

them further from Paris on the following Monday
morning.

From the Embassy I telephoned President Trip of
the Netherlands Bank at Amsterdam and told him I was

proceeding to Amsterdam that night. It was arranged
that he should receive me the following noon, and
that we were then to proceed together to The Hague

where it was to be arranged for Prime Minister Colijn
and Finance Minister Oud to receive us after luncheon.

I explained to Dr. Trip that, for our plans to carry
through, it would be necessary to obtain from the

Dutch officials their adherence to the tripartite
declaration of September 25, as well as their signature
to the declaration which had been drafted on my earlier

visit to the Netherlands.
I telephoned Professor Bachmann, President of the
Swiss National Bank. Professor Hachmann was at the

office of his Bank in Zurich and told me that he
would be there on Saturday forenoon. Fortunately, Dr.
Meyer, the head of the Swiss Department of Finances and

Customs, and also President of the Swiss Federal Council,
was to visit Professor Sachmann at the Bank in Zurich at
9 o'clock on Saturday morning. Since those wore the two
Swiss officials whom it would be necessary for me to see,

it was therefore arranged that I should come to the Bank
in

- 66 in Surich 88 early as possible on Saturday morning.

President Bachmann, who is a very early riser, told
me that he hoped I could receh the Bank at 7 a.m. so
that we could have our discussion before the Finance

Minister arrived. I stressed the importance of the
Swiss being ready to adhere formally to the tripertite
declaration of September 25 and the urgency for speed

in order that everything could be concluded by the
week-end. In accordance with the promise which I had
given M. Baumgartner before leaving Paris, I also
telephoned him at the French Ministry of Finance to
let him know of the Belgian approval of the declaration
and also of my itinerary.
Before leaving Brussels on the evening train for
Amsterdam, I filed with the Kmbassy a cablegram report-

ing fully to you my visit with the Belgian officials.
Proceeding from Brussels, I arrived in Ameterdam

on the night of November 19. I called at the Bank of
the Netherlands the following noon, where I was received

by President Trip and Director Beaufort. I reviewed
developments to date and gave them copies of all

documents pertinent to your proposed declaration. In

order to simplify matters and to avoid any delay in
The Hegue, Dr. Trip and I drew up a short draft of a
statement which we thought would suffice as indicating

adherence of the Netherlands to the tripartite declaration of September 25. We talked streight through
until time for the train to The Hauge, without having
any

- 67 -

any lunch. I was sincerely appreciative of the
assistance which Dr. Trip was giving me, since he was
very busy on the day of my visit, which also happened

to be his sixtieth birthday.
Upon our arrival in The Hague, we went directly

to the office of Prime Minister Colijn, where Minister
of Finance Oud also joined us. MR. and and Trip signed
and delivered to me their technical declaration in
exactly the terms which had been drafted on my previous
visit and had been quoted in my cablegram No. 1075 of

November 4, 10 a.m. Prime Minister Colijn took a very

active interest in the discussions and insisted on
reading to us the full text of the declaration of
September 25 before consenting to adherence thereto.

After he WES antified in his own mind as to the entire

situation, he called to his office on official of the
Dutch Ministry for Foreign Affairs and instructed him
to send cablegrams at once to the Dutch diplomatic
representatives at Washington, Paris and London to

deliver to the respective Foreign offices, not later
than Saturday afternoon, the message of Dutch adherence

in the terms which Dr. Trip and I had drafted. The
schedule for press releases was then confirmed and it
was agreed that I should telephone Dr. Trip on Monday

morning to give him the latest news in regard to
Switzerland and any further press communiques which I

might have by that time.
After leaving the Prime Minister, I proceeded to
our

- 68 -

our Legation, where I explained my visit to Minister
Kamet. I put in a telephone call for you and gave
you the above facts. I also sent a cablegram
confirming the report which I had giver you over the
telephone.

National Bank of Switzerland at Burich at 8 s.m.
President Bachmann and his assistant, M. Prenniger,

Belgian and Dutch officials. We then drafted a
telegram to the Swiss Ministry for Foreign Affairs
at Born, directing that Ministry to send the necessary
telegraphic instructions inmediately to the Swiss
diplometic representatives at Washington, Paris and

London, for delivery to the respective Foreign offices
not later than Sunday forenoon. In this telegram we
used the same text of adherence to the general

principles of the tripartite declaration of September

- 69 25 that had been employed in the Netherlaads. To
have followed the Belgian example of preparing a

statement in almost identic terms with the tripartite
declaration would have involved delay in cabling,
because of the length thereof, and would have added

little to the strength of the declaration.
When President Meyer arrived at the Bank at 9
o'clock, he promptly approved the telegram which had

been drafted, and this was despatched to Bern. TO the

Swiss officials I explained in detail the schedule for
press releases and promised to telephone President
Bachmann from Peris on Monday morning any further

available texts of communiques. I called at our
Consulate General at Zurich after the foregoing
arrangements had been completed, and from there

telephoned Minister Wilson at Bern at 11 a.m. to

inform him of the negotiations. I lunched with HM.
Bachmann and Pfenniger. In the afternoon, I reached